00-000000000018483092021-12-310001848309dei:BusinessContactMember2021-01-012021-12-3100018483092021-01-012021-12-310001848309sgml:NotePayableMember2021-12-310001848309sgml:NonCapitalLossesCarriedForwardMember2021-12-310001848309sgml:NotePayableMember2020-12-310001848309sgml:NonCapitalLossesCarriedForwardMember2020-12-310001848309ifrs-full:NotLaterThanOneYearMember2021-01-012021-12-310001848309ifrs-full:LaterThanTwoYearsAndNotLaterThanThreeYearsMember2021-01-012021-12-310001848309ifrs-full:LaterThanThreeYearsAndNotLaterThanFourYearsMember2021-01-012021-12-310001848309ifrs-full:LaterThanOneYearAndNotLaterThanTwoYearsMember2021-01-012021-12-310001848309ifrs-full:LaterThanFiveYearsMember2021-01-012021-12-310001848309sgml:LrcLpIMember2021-12-310001848309srt:MinimumMember2021-01-012021-12-310001848309srt:MaximumMember2021-01-012021-12-310001848309sgml:MiazgaParticipacoesS.aMembersgml:PrepaidLandLeaseOffsetMember2021-12-310001848309sgml:MiazgaParticipacoesS.aMembersgml:PrepaidLandLeaseOffsetMember2020-12-310001848309sgml:SmsaMember2017-12-012017-12-310001848309sgml:SigmaMineracaoS.aMember2021-01-012021-12-310001848309sgml:RestrictedShareUnitsMembersrt:ChiefExecutiveOfficerMember2021-12-310001848309sgml:RestrictedShareUnitsMember2021-12-310001848309sgml:RestrictedShareUnitsMembersrt:ChiefExecutiveOfficerMember2021-09-080001848309srt:ChiefExecutiveOfficerMember2021-09-080001848309sgml:RestrictedShareUnitsMembersrt:DirectorMember2021-09-030001848309sgml:RestrictedShareUnitsMembersgml:KeyEmployeesDirectorsAndDesignatedServiceProvidersMember2021-03-040001848309stpr:CA2021-12-310001848309country:BR2021-12-3100018483092021-12-232021-12-230001848309sgml:A10ServicosEspecializadosEmAvaliacaoDeEmpresasLtda.AndA10InvestimentosLtdaMember2020-08-132020-08-130001848309sgml:RestrictedShareUnitsMembersgml:IfrsShareBasedPaymentArrangementTrancheTwoMember2021-12-310001848309sgml:RestrictedShareUnitsMembersgml:IfrsShareBasedPaymentArrangementTrancheThreeMember2021-12-310001848309sgml:RestrictedShareUnitsMembersgml:IfrsShareBasedPaymentArrangementTrancheOneMember2021-12-310001848309sgml:RestrictedShareUnitsMembersgml:IfrsShareBasedPaymentArrangementTrancheFourMember2021-12-310001848309sgml:MiazgaParticipacoesS.aMembersgml:PrepaidLandLeaseOffsetMember2021-01-012021-12-310001848309sgml:MiazgaParticipacoesS.aMembersgml:LeasingAgreementsMember2021-01-012021-12-310001848309sgml:ArqueanaEmpreendimentosEParticipacoesS.aMembersgml:SharePurchaseAgreementMember2021-01-012021-12-310001848309sgml:ArqueanaEmpreendimentosEParticipacoesS.aMembersgml:LeasingAgreementsMember2021-01-012021-12-310001848309sgml:A10ServicosEspecializadosEmAvaliacaoDeEmpresasLtda.AndA10InvestimentosLtdaMembersgml:WarrantsMember2021-01-012021-12-310001848309sgml:A10ServicosEspecializadosEmAvaliacaoDeEmpresasLtda.AndA10InvestimentosLtdaMembersgml:RevolvingCreditFacilityMember2021-01-012021-12-310001848309sgml:A10ServicosEspecializadosEmAvaliacaoDeEmpresasLtda.AndA10InvestimentosLtdaMembersgml:CostSharingAgreementMember2021-01-012021-12-310001848309sgml:A10ServicosEspecializadosEmAvaliacaoDeEmpresasLtda.AndA10InvestimentosLtdaMembersgml:CommissionFeesMember2021-01-012021-12-310001848309sgml:MiazgaParticipacoesS.aMembersgml:PrepaidLandLeaseOffsetMember2020-01-012020-12-310001848309sgml:MiazgaParticipacoesS.aMembersgml:LeasingAgreementsMember2020-01-012020-12-310001848309sgml:ArqueanaEmpreendimentosEParticipacoesS.aMembersgml:SharePurchaseAgreementMember2020-01-012020-12-310001848309sgml:ArqueanaEmpreendimentosEParticipacoesS.aMembersgml:LeasingAgreementsMember2020-01-012020-12-310001848309sgml:A10ServicosEspecializadosEmAvaliacaoDeEmpresasLtda.AndA10InvestimentosLtdaMembersgml:RevolvingCreditFacilityMember2020-01-012020-12-310001848309sgml:A10ServicosEspecializadosEmAvaliacaoDeEmpresasLtda.AndA10InvestimentosLtdaMembersgml:CostSharingAgreementMember2020-01-012020-12-310001848309sgml:A10ServicosEspecializadosEmAvaliacaoDeEmpresasLtda.AndA10InvestimentosLtdaMembersgml:CommissionFeesMember2020-01-012020-12-310001848309sgml:MiazgaParticipacoesS.aMember2021-12-310001848309sgml:ArqueanaEmpreendimentosEParticipacoesS.aMember2021-12-310001848309sgml:A10ServicosEspecializadosEmAvaliacaoDeEmpresasLtda.AndA10InvestimentosLtdaMember2021-12-310001848309sgml:NotePayableMembersgml:March282022Member2021-12-310001848309sgml:NotePayableMember2021-12-310001848309sgml:NotePayableMember2020-12-310001848309sgml:NotePayableMember2019-12-310001848309sgml:UnsecuredRevolvingCreditFacilityMember2019-11-292019-11-290001848309sgml:UnsecuredRevolvingCreditFacilityMember2021-05-292021-05-290001848309sgml:UnsecuredRevolvingCreditFacilityMember2020-11-282020-11-2800018483092019-03-2600018483092019-04-042019-04-0400018483092019-03-262019-03-260001848309sgml:UnsecuredRevolvingCreditFacilityMember2020-01-012020-12-310001848309sgml:SmsaMember2021-01-012021-12-310001848309sgml:SigmaLithiumHoldingsInc.Member2021-01-012021-12-310001848309sgml:AccumulatedDepreciationAndAmortizedMembersgml:PilotPlantMember2021-12-310001848309sgml:AccumulatedDepreciationAndAmortizedMembersgml:FurnitureMember2021-12-310001848309sgml:AccumulatedDepreciationAndAmortizedMemberifrs-full:VehiclesMember2021-12-310001848309sgml:AccumulatedDepreciationAndAmortizedMemberifrs-full:RightofuseAssetsMember2021-12-310001848309sgml:AccumulatedDepreciationAndAmortizedMemberifrs-full:MachineryMember2021-12-310001848309sgml:AccumulatedDepreciationAndAmortizedMemberifrs-full:BuildingsMember2021-12-310001848309ifrs-full:GrossCarryingAmountMembersgml:PilotPlantMember2021-12-310001848309ifrs-full:GrossCarryingAmountMembersgml:FurnitureMember2021-12-310001848309ifrs-full:GrossCarryingAmountMemberifrs-full:VehiclesMember2021-12-310001848309ifrs-full:GrossCarryingAmountMemberifrs-full:RightofuseAssetsMember2021-12-310001848309ifrs-full:GrossCarryingAmountMemberifrs-full:MachineryMember2021-12-310001848309ifrs-full:GrossCarryingAmountMemberifrs-full:ConstructionInProgressMember2021-12-310001848309ifrs-full:GrossCarryingAmountMemberifrs-full:BuildingsMember2021-12-310001848309sgml:PilotPlantMember2021-12-310001848309sgml:FurnitureMember2021-12-310001848309sgml:AccumulatedDepreciationAndAmortizedMember2021-12-310001848309ifrs-full:VehiclesMember2021-12-310001848309ifrs-full:RightofuseAssetsMember2021-12-310001848309ifrs-full:MachineryMember2021-12-310001848309ifrs-full:GrossCarryingAmountMember2021-12-310001848309ifrs-full:ConstructionInProgressMember2021-12-310001848309ifrs-full:BuildingsMember2021-12-310001848309sgml:AccumulatedDepreciationAndAmortizedMembersgml:PilotPlantMember2020-12-310001848309sgml:AccumulatedDepreciationAndAmortizedMembersgml:FurnitureMember2020-12-310001848309sgml:AccumulatedDepreciationAndAmortizedMemberifrs-full:VehiclesMember2020-12-310001848309sgml:AccumulatedDepreciationAndAmortizedMemberifrs-full:RightofuseAssetsMember2020-12-310001848309sgml:AccumulatedDepreciationAndAmortizedMemberifrs-full:MachineryMember2020-12-310001848309sgml:AccumulatedDepreciationAndAmortizedMemberifrs-full:BuildingsMember2020-12-310001848309ifrs-full:GrossCarryingAmountMembersgml:PilotPlantMember2020-12-310001848309ifrs-full:GrossCarryingAmountMembersgml:FurnitureMember2020-12-310001848309ifrs-full:GrossCarryingAmountMemberifrs-full:VehiclesMember2020-12-310001848309ifrs-full:GrossCarryingAmountMemberifrs-full:RightofuseAssetsMember2020-12-310001848309ifrs-full:GrossCarryingAmountMemberifrs-full:MachineryMember2020-12-310001848309ifrs-full:GrossCarryingAmountMemberifrs-full:BuildingsMember2020-12-310001848309sgml:PilotPlantMember2020-12-310001848309sgml:FurnitureMember2020-12-310001848309sgml:AccumulatedDepreciationAndAmortizedMember2020-12-310001848309ifrs-full:VehiclesMember2020-12-310001848309ifrs-full:RightofuseAssetsMember2020-12-310001848309ifrs-full:MachineryMember2020-12-310001848309ifrs-full:GrossCarryingAmountMember2020-12-310001848309ifrs-full:BuildingsMember2020-12-310001848309sgml:AccumulatedDepreciationAndAmortizedMembersgml:PilotPlantMember2019-12-310001848309sgml:AccumulatedDepreciationAndAmortizedMembersgml:FurnitureMember2019-12-310001848309sgml:AccumulatedDepreciationAndAmortizedMemberifrs-full:VehiclesMember2019-12-310001848309sgml:AccumulatedDepreciationAndAmortizedMemberifrs-full:RightofuseAssetsMember2019-12-310001848309sgml:AccumulatedDepreciationAndAmortizedMemberifrs-full:MachineryMember2019-12-310001848309sgml:AccumulatedDepreciationAndAmortizedMemberifrs-full:BuildingsMember2019-12-310001848309ifrs-full:GrossCarryingAmountMembersgml:PilotPlantMember2019-12-310001848309ifrs-full:GrossCarryingAmountMembersgml:FurnitureMember2019-12-310001848309ifrs-full:GrossCarryingAmountMemberifrs-full:VehiclesMember2019-12-310001848309ifrs-full:GrossCarryingAmountMemberifrs-full:RightofuseAssetsMember2019-12-310001848309ifrs-full:GrossCarryingAmountMemberifrs-full:MachineryMember2019-12-310001848309ifrs-full:GrossCarryingAmountMemberifrs-full:BuildingsMember2019-12-310001848309sgml:AccumulatedDepreciationAndAmortizedMember2019-12-310001848309ifrs-full:GrossCarryingAmountMember2019-12-310001848309ifrs-full:RetainedEarningsMember2021-01-012021-12-310001848309ifrs-full:RetainedEarningsMember2020-01-012020-12-310001848309ifrs-full:MajorOrdinaryShareTransactionsMember2022-02-012022-02-280001848309sgml:A10ServicosEspecializadosEmAvaliacaoDeEmpresasLtda.AndA10InvestimentosLtdaMember2021-12-232021-12-230001848309sgml:A10ServicosEspecializadosEmAvaliacaoDeEmpresasLtda.AndA10InvestimentosLtdaMember2021-02-122021-02-1200018483092021-02-122021-02-1200018483092020-08-132020-08-130001848309ifrs-full:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-12-310001848309ifrs-full:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-12-310001848309sgml:RestrictedShareUnitsMembersrt:ChiefExecutiveOfficerMember2021-01-012021-12-310001848309sgml:RestrictedShareUnitsMembersgml:IfrsShareBasedPaymentArrangementTrancheTwoMember2021-01-012021-12-310001848309sgml:RestrictedShareUnitsMembersgml:IfrsShareBasedPaymentArrangementTrancheThreeMember2021-01-012021-12-310001848309sgml:RestrictedShareUnitsMembersgml:IfrsShareBasedPaymentArrangementTrancheOneMember2021-01-012021-12-310001848309sgml:RestrictedShareUnitsMembersgml:IfrsShareBasedPaymentArrangementTrancheMember2021-01-012021-12-310001848309sgml:RestrictedShareUnitsMembersgml:IfrsShareBasedPaymentArrangementTrancheFourMember2021-01-012021-12-310001848309ifrs-full:IssuedCapitalMember2020-01-012020-12-310001848309sgml:UnsecuredRevolvingCreditFacilityMember2021-12-310001848309sgml:UnsecuredRevolvingCreditFacilityMember2020-12-310001848309sgml:PaymentOfNotesPayableMember2022-03-012022-03-310001848309ifrs-full:AdditionalPaidinCapitalMember2020-01-012020-12-310001848309ifrs-full:GrossCarryingAmountMembersgml:PilotPlantMember2021-01-012021-12-310001848309ifrs-full:GrossCarryingAmountMemberifrs-full:BuildingsMember2021-01-012021-12-310001848309ifrs-full:GrossCarryingAmountMembersgml:PilotPlantMember2020-01-012020-12-310001848309ifrs-full:GrossCarryingAmountMemberifrs-full:VehiclesMember2020-01-012020-12-310001848309ifrs-full:GrossCarryingAmountMemberifrs-full:MachineryMember2020-01-012020-12-310001848309ifrs-full:GrossCarryingAmountMemberifrs-full:BuildingsMember2020-01-012020-12-310001848309ifrs-full:IssuedCapitalMember2021-01-012021-12-310001848309ifrs-full:AdditionalPaidinCapitalMember2021-01-012021-12-310001848309ifrs-full:LaterThanThreeYearsAndNotLaterThanFiveYearsMember2021-12-310001848309ifrs-full:LaterThanOneYearAndNotLaterThanThreeYearsMember2021-12-310001848309ifrs-full:LaterThanFiveYearsMember2021-12-310001848309ifrs-full:SellingGeneralAndAdministrativeExpenseMember2021-01-012021-12-310001848309ifrs-full:SellingGeneralAndAdministrativeExpenseMember2020-01-012020-12-310001848309sgml:RestrictedShareUnitsMember2021-01-012021-12-310001848309sgml:RestrictedShareUnitsMember2020-01-012020-12-310001848309ifrs-full:RetainedEarningsMember2021-12-310001848309ifrs-full:IssuedCapitalMember2021-12-310001848309ifrs-full:AdditionalPaidinCapitalMember2021-12-310001848309ifrs-full:AccumulatedOtherComprehensiveIncomeMember2021-12-310001848309ifrs-full:RetainedEarningsMember2020-12-310001848309ifrs-full:IssuedCapitalMember2020-12-310001848309ifrs-full:AdditionalPaidinCapitalMember2020-12-310001848309ifrs-full:AccumulatedOtherComprehensiveIncomeMember2020-12-310001848309ifrs-full:RetainedEarningsMember2019-12-310001848309ifrs-full:IssuedCapitalMember2019-12-310001848309ifrs-full:AdditionalPaidinCapitalMember2019-12-310001848309ifrs-full:AccumulatedOtherComprehensiveIncomeMember2019-12-310001848309sgml:PilotPlantMember2021-01-012021-12-310001848309sgml:FurnitureMember2021-01-012021-12-310001848309ifrs-full:VehiclesMember2021-01-012021-12-310001848309ifrs-full:MachineryMember2021-01-012021-12-310001848309ifrs-full:FixturesAndFittingsMember2021-01-012021-12-310001848309ifrs-full:BuildingsMember2021-01-012021-12-310001848309sgml:AccumulatedDepreciationAndAmortizedMembersgml:PilotPlantMember2021-01-012021-12-310001848309sgml:AccumulatedDepreciationAndAmortizedMembersgml:FurnitureMember2021-01-012021-12-310001848309sgml:AccumulatedDepreciationAndAmortizedMemberifrs-full:VehiclesMember2021-01-012021-12-310001848309sgml:AccumulatedDepreciationAndAmortizedMemberifrs-full:RightofuseAssetsMember2021-01-012021-12-310001848309sgml:AccumulatedDepreciationAndAmortizedMemberifrs-full:MachineryMember2021-01-012021-12-310001848309sgml:AccumulatedDepreciationAndAmortizedMemberifrs-full:BuildingsMember2021-01-012021-12-310001848309sgml:AccumulatedDepreciationAndAmortizedMember2021-01-012021-12-310001848309sgml:AccumulatedDepreciationAndAmortizedMembersgml:PilotPlantMember2020-01-012020-12-310001848309sgml:AccumulatedDepreciationAndAmortizedMembersgml:FurnitureMember2020-01-012020-12-310001848309sgml:AccumulatedDepreciationAndAmortizedMemberifrs-full:VehiclesMember2020-01-012020-12-310001848309sgml:AccumulatedDepreciationAndAmortizedMemberifrs-full:RightofuseAssetsMember2020-01-012020-12-310001848309sgml:AccumulatedDepreciationAndAmortizedMemberifrs-full:MachineryMember2020-01-012020-12-310001848309sgml:AccumulatedDepreciationAndAmortizedMemberifrs-full:BuildingsMember2020-01-012020-12-310001848309sgml:AccumulatedDepreciationAndAmortizedMember2020-01-012020-12-310001848309sgml:LossCarryForwardMemberstpr:CA2021-12-310001848309sgml:LossCarryForwardMembercountry:BR2021-12-310001848309sgml:ShareIssueCostsAndPropertyAndEquipmentMember2021-12-310001848309ifrs-full:OtherTemporaryDifferencesMember2021-12-310001848309sgml:LossCarryForwardMemberstpr:CA2020-12-310001848309sgml:LossCarryForwardMembercountry:BR2020-12-310001848309sgml:ShareIssueCostsAndPropertyAndEquipmentMember2020-12-310001848309ifrs-full:CurrencyRiskMembercurrency:BRL2021-12-310001848309ifrs-full:CurrencyRiskMembercurrency:BRL2020-12-310001848309sgml:GrotaDoCiriloCguMember2021-12-310001848309ifrs-full:CurrencyRiskMembercurrency:USD2021-12-310001848309currency:USD2021-12-310001848309currency:BRL2021-12-310001848309ifrs-full:CurrencyRiskMembercurrency:USD2020-12-310001848309currency:USD2020-12-310001848309currency:BRL2020-12-310001848309sgml:UnsecuredRevolvingCreditFacilityMember2019-11-290001848309sgml:NotePayableMembersgml:March282022Membercurrency:CAD2021-12-310001848309sgml:NotePayableMembersgml:March282022Membercurrency:BRL2021-12-310001848309ifrs-full:NotLaterThanOneYearMember2021-12-3100018483092019-12-310001848309sgml:MiazgaParticipacoesS.aMembersgml:LeasingAgreementsMember2021-12-310001848309sgml:ArqueanaEmpreendimentosEParticipacoesS.aMembersgml:SharePurchaseAgreementMember2021-12-310001848309sgml:ArqueanaEmpreendimentosEParticipacoesS.aMembersgml:LeasingAgreementsMember2021-12-310001848309sgml:MiazgaParticipacoesS.aMembersgml:LeasingAgreementsMember2020-12-310001848309sgml:ArqueanaEmpreendimentosEParticipacoesS.aMembersgml:SharePurchaseAgreementMember2020-12-310001848309sgml:ArqueanaEmpreendimentosEParticipacoesS.aMembersgml:LeasingAgreementsMember2020-12-310001848309sgml:A10ServicosEspecializadosEmAvaliacaoDeEmpresasLtda.AndA10InvestimentosLtdaMembersgml:RevolvingCreditFacilityMember2020-12-310001848309ifrs-full:KeyManagementPersonnelOfEntityOrParentMembersgml:TravelCostReimbursementMember2020-12-310001848309sgml:NotePayableMember2021-01-012021-12-310001848309sgml:NotePayableMember2020-01-012020-12-310001848309ifrs-full:GrossCarryingAmountMembersgml:FurnitureMember2021-01-012021-12-310001848309ifrs-full:GrossCarryingAmountMemberifrs-full:VehiclesMember2021-01-012021-12-310001848309ifrs-full:GrossCarryingAmountMemberifrs-full:RightofuseAssetsMember2021-01-012021-12-310001848309ifrs-full:GrossCarryingAmountMemberifrs-full:MachineryMember2021-01-012021-12-310001848309ifrs-full:GrossCarryingAmountMemberifrs-full:ConstructionInProgressMember2021-01-012021-12-310001848309ifrs-full:GrossCarryingAmountMember2021-01-012021-12-310001848309ifrs-full:GrossCarryingAmountMembersgml:FurnitureMember2020-01-012020-12-310001848309ifrs-full:GrossCarryingAmountMemberifrs-full:RightofuseAssetsMember2020-01-012020-12-310001848309ifrs-full:GrossCarryingAmountMember2020-01-012020-12-3100018483092020-12-3100018483092020-01-012020-12-31iso4217:USDutr:Tsgml:propertysgml:tranchesgml:itemutr:tiso4217:CADxbrli:pureiso4217:BRLiso4217:CADxbrli:sharesiso4217:USDiso4217:BRLiso4217:USDsgml:EquityInstrumentssgml:directorxbrli:shares

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

__________________

FORM 40-F

__________________

Registration Statement pursuant to Section 12 of the Securities Exchange Act of 1934

or

Annual Report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2021
Commission File Number: 001-40786

__________________

SIGMA LITHIUM CORPORATION
(Exact name of Registrant as specified in its charter)

__________________

Canada

1000

Not Applicable

(Province or other jurisdiction of
incorporation or organization)

(Primary Standard Industrial
Classification Code Number)

(I.R.S. Employer Identification

Number)

2200 HSBC Building

885 West Georgia Street

Vancouver, British Columbia

V6C 3E8
Tel: +55 11-2985-0089
(Address and telephone number of Registrant’s principal executive offices)

C T Corporation System
28 Liberty Street
New York, New York 10005
Telephone: (212) 894-8940
(Name, address (including zip code) and telephone number (including area code) of agent for service in the United States)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Shares, no par value

SGML

The Nasdaq Capital Market

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

For annual reports, indicate by check mark the information filed with this Form:

Annual Information Form

Audited Annual Financial Statements

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:

99,377,349 Common Shares outstanding as of December 31, 2021

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes No

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).

Yes No

Indicate by check mark whether the Registrant is an emerging growth company as defined in Rule 12b-2 of the Exchange Act.

Emerging growth company

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.  

†The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

FORWARD-LOOKING STATEMENTS

Certain information and statements in this Annual Report on Form 40-F (“Annual Report”) may constitute “forward looking information” within the meaning of Canadian securities legislation and “forward looking statements” within the meaning of U.S. securities legislation (collectively, “Forward Looking Information”), which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Sigma Lithium Corporation (the “Company”), or industry results, to be materially different from any future results, performance or achievements expressed or implied by such Forward Looking Information. All statements, other than statements of historical fact, may be Forward Looking Information, including, but not limited to, mineral resource or mineral reserve estimates (which reflect a prediction of mineralization that would be realized by development). When used in this Annual Report, such statements generally use words such as “may”, “would”, “could”, “will”, “intend”, “expect”, “believe”, “plan”, “anticipate”, “estimate” and other similar terminology. These statements reflect management’s current expectations regarding future events and operating performance and speak only as of the date of this Annual Report. Forward Looking Information involves significant risks and uncertainties, should not be read as guarantees of future performance or results, and does not necessarily provide accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the Forward Looking Information, which is based upon what management believes are reasonable assumptions, and there can be no assurance that actual results will be consistent with the Forward Looking Information.

In particular (but without limitation), this Annual Report contains Forward Looking Information with respect to the following matters: statements regarding anticipated decision making with respect to the Grota do Cirilo Project, located in the state of Minas Gerais in Brazil (the “Project”); capital expenditure programs; estimates of mineral resources and mineral reserves; development of mineral resources and mineral reserves; government regulation of mining operations and treatment under governmental and taxation regimes; the future price of commodities, including lithium; the realization of mineral resource and mineral reserve estimates, including whether mineral resources will ever be developed into mineral reserves; the timing and amount of future production; currency exchange and interest rates; expected outcome and timing of environmental surveys and permit applications and other environmental matters; the Company’s ability to raise capital and obtain project financing; expected expenditures to be made by the Company on its properties; successful operations and the timing, cost, quantity, capacity and quality of production; capital costs, operating costs and sustaining capital requirements, including the cost of construction of the processing plant for the Project; and competitive conditions and anticipated trends post-COVID-19 pandemic and the ongoing uncertainties and effects in respect of the COVID-19 pandemic and the military conflict in Ukraine.

Forward Looking Information does not take into account the effect of transactions or other items announced or occurring after the statements are made. Forward Looking Information is based upon a number of expectations and assumptions and is subject to a number of risks and uncertainties, many of which are beyond the Company’s control, that could cause actual results to differ materially from those disclosed in or implied by such Forward Looking Information. With respect to the Forward Looking Information, the Company has made assumptions regarding, among other things:

General economic and political conditions (including but not limited to the impact of the continuance or escalation of the military conflict between Russia and Ukraine, and economic sanctions in relation thereto).
Stable and supportive legislative, regulatory and community environment in the jurisdictions where the Company operates.
Stability and inflation of the Brazilian Real, including any foreign exchange or capital controls which may be enacted in respect thereof, and the effect of current or any additional regulations on the Company’s operations.
Anticipated trends and effects in respect of the COVID-19 pandemic and post-pandemic.
Demand for lithium, including that such demand is supported by growth in the electric vehicle (“EV”) market.
Estimates of, and changes to, the market prices for lithium.
The impact of increasing competition in the lithium business and the Company’s competitive position in the industry.
The Company’s market position and future financial and operating performance.
The Company’s estimates of mineral resources and mineral reserves, including whether mineral resources will ever be developed into mineral reserves.

2

Anticipated timing and results of exploration, development and construction activities.
Reliability of technical data.
The Company’s ability to develop and achieve production at the Project.
The Company’s ability to obtain financing on satisfactory terms to develop the Project.
The Company’s ability to obtain and maintain mining, exploration, environmental and other permits, authorizations and approvals for the Project.
The timing and outcome of regulatory and permitting matters for the Project.
The exploration, development, construction and operational costs for the Project.
The accuracy of budget, construction and operations estimates for the Project.
Successful negotiation of definitive commercial agreements, including off-take agreements for the Project.
The Company’s ability to operate in a safe and effective manner.

Although management believes that the assumptions and expectations reflected in such Forward Looking Information are reasonable, there can be no assurance that these assumptions and expectations will prove to be correct. Since Forward Looking Information inherently involves risks and uncertainties, undue reliance should not be placed on such information.

The Company’s actual results could differ materially from those anticipated in any Forward Looking Information as a result of various known and unknown risk factors, including (but not limited to) the risk factors referred to under the heading “Risk Factors” in the Annual Information Form of the Company (the “AIF”). Such risks relate to, but are not limited to, the following:

The Company may not develop the Project into a commercial mining operation.
There can be no assurance that market prices for lithium will remain at current levels or that such prices will improve.
The market for electric vehicles EVs and other large format batteries currently has limited market share and no assurances can be given for the rate at which this market will develop, if at all, which could affect the success of the Company and its ability to develop lithium operations.
Changes in technology or other developments could result in preferences for substitute products.
New production of lithium hydroxide or lithium carbonate from current or new competitors in the lithium markets could adversely affect prices.
The Project is at development stage and the Company’s ability to succeed in progressing through development to commercial operations will depend on a number of factors, some of which are outside its control.
The Company’s financial condition, operations and results of any future operations are subject to political, economic, social, regulatory and geographic risks of doing business in Brazil.
Violations of anti-corruption, anti-bribery, anti-money laundering and economic sanctions laws and regulations could materially adversely affect the Company’s business, reputation, results of any future operations and financial condition.
The Company is subject to regulatory frameworks applicable to the Brazilian mining industry which could be subject to further change, as well as government approval and permitting requirements, which may result in limitations on the Company’s business and activities.
The Company’s operations are subject to numerous environmental laws and regulations and expose the Company to environmental compliance risks, which may result in significant costs and have the potential to reduce the profitability of operations.
Physical climate change events and the trend toward more stringent regulations aimed at reducing the effects of climate change could have an adverse effect on the Company’s business and future operations.
As the Company does not have any experience in the construction and operation of a mine, processing plants and related infrastructure, it is more difficult to evaluate the Company’s prospects, and the Company’s future success is more uncertain than if it had a more proven history of developing a mine.
The Company’s future production estimates are based on existing mine plans and other assumptions which change from time to time. No assurance can be given that such estimates will be achieved.
The Company may experience unexpected costs and cost overruns, problems and delays during construction, development, mine start-up and operations for reasons outside of the Company’s control, which have the potential

3

to materially affect its ability to fully fund required expenditures and/or production or, alternatively, may require the Company to consider less attractive financing solutions.
The Company’s capital and operating cost estimates may vary from actual costs and revenues for reasons outside of the Company’s control.
The Company’s operations are subject to the high degree of risk normally incidental to the exploration for, and the development and operation of, mineral properties.
Insurance may not be available to insure against all such risks, or the costs of such insurance may be uneconomic. Losses from uninsured and underinsured losses have the potential to materially affect the Company’s financial position and prospects.
The Company is subject to risks associated with securing title and property interests.
The Company is subject to strong competition in Brazil and in the global mining industry.
The Company may become subject to government orders, investigations, inquiries or other proceedings (including civil claims) relating to health and safety matters, which could result in consequences material to its business and operations.
The Company’s mineral resource and mineral reserve estimates are estimates only and no assurance can be given that any particular level of recovery of minerals will in fact be realized or that identified mineral resources or mineral reserves will ever qualify as a commercially mineable (or viable) deposit.
The Company’s operations and the development of its projects may be adversely affected if it is unable to maintain positive community relations.
The Company is exposed to risks associated with doing business with counterparties, which may impact the Company’s operations and financial condition.
Any limitation on the transfer of cash or other assets between the Company and the Company’s subsidiaries, or among such entities, could restrict the Company’s ability to fund its operations efficiently.
The Company is subject to risks associated with its reliance on consultants and others for mineral exploration and exploitation expertise.
The current COVID-19 pandemic could have a material adverse effect on the Company’s business, operations, financial condition and stock price.
The current military conflict in Ukraine and the economic or other sanctions imposed may impact global markets in such a manner as to have a material adverse effect on the Company’s business, operations, financial condition and stock price.
If the Company is unable to ultimately generate sufficient revenues to become profitable and have positive cash flows, it could have a material adverse effect on its prospects, business, financial condition, results of operations or overall viability as an operating business.
The Company is subject to liquidity risk and therefore may have to include a “going concern” note in its financial statements.
The Company may not be able to obtain sufficient financing in the future on acceptable terms, which could have a material adverse effect on the Company’s business, results of operations and financial condition. In order to obtain additional financing, the Company may conduct additional (and possibly dilutive) equity offerings or debt issuances in the future.
The Company may be unable to achieve cash flow from operating activities sufficient to permit it to pay the principal, premium, if any, and interest on the Company’s indebtedness, or maintain its debt covenants.
The Company has not declared or paid dividends in the past and may not declare or pay dividends in the future.
The Company will incur increased costs as a result of being a public company both in Canada listed on the TSXV and in the United States listed on the Nasdaq Capital Market (“Nasdaq”), and its management will be required to devote further substantial time to United States public company compliance efforts.
If the Company does not maintain adequate and appropriate internal controls over financial reporting as outlined in accordance with NI 52-109 or the Rules and Regulations of the Securities and Exchange Commission (the “SEC”), the Company will have to report a material weakness and disclose that the Company has not maintained appropriate internal controls over financial reporting.
As a foreign private issuer, the Company is subject to different U.S. securities laws and rules than a domestic U.S. issuer, which may limit the information publicly available to its shareholders.
Failure to retain key officers, consultants and employees or to attract and, if attracted, retain additional key individuals with necessary skills could have a materially adverse impact upon the Company’s success.

4

The Company is subject to currency fluctuation risks.
From time to time, the Company may become involved in litigation, which may have a material adverse effect on its business financial condition and prospects.
Certain directors and officers of the Company are, or may become, associated with other natural resource companies which may give rise to conflicts of interest.
The market price for the Company’s shares may be volatile and subject to wide fluctuations in response to numerous factors beyond its control, and the Company may be subject to securities litigation as a result.
If securities or industry analysts do not publish research or reports about the Company’s business, or if they downgrade the Common Shares, the price of the Common Shares could decline.
The Company will have broad discretion over the use of the net proceeds from offerings of its securities.
There is no guarantee that the Common Shares will earn any positive return in the short term or long term.
The Company has a major shareholder which owns 47.7% of the outstanding Common Shares and, as such, for as long as such shareholder directly or indirectly maintains a significant interest in the Company, it may be in a position to affect the Company’s governance, operations and the market price of the Common Shares.
As the Company is a Canadian corporation but most of its directors and officers are not citizens or residents of Canada or the U.S., it may be difficult or impossible for an investor to enforce judgements against the Company and its directors and officers outside of Canada and the U.S. which may have been obtained in Canadian or U.S. courts or initiate court action outside Canada or the U.S. against the Company and its directors and officers in respect of an alleged breach of securities laws or otherwise. Similarly, it may be difficult for U.S. shareholders to effect service on the Company to realize on judgments obtained in the United States.
The Company is governed by the Canada Business Corporations Act and by the securities laws of the province of Ontario, which in some cases have a different effect on shareholders than U.S. corporate laws and U.S. securities laws.
The Company is subject to risks associated with its information technology systems and cyber-security.
The Company may be a Passive Foreign Investment Company, which may result in adverse U.S. federal income tax consequences for U.S. holders of Common Shares.

Readers are cautioned that the foregoing lists of assumptions and risks is not exhaustive. The Forward Looking Information contained in this Annual Report is expressly qualified by these cautionary statements. All Forward Looking Information in this Annual Report speaks as of the date of this Annual Report. The Company does not undertake any obligation to update or revise any Forward Looking Information, whether as a result of new information, future events or otherwise, except as required by applicable securities law. Additional information about these assumptions, risks and uncertainties is contained in the Company’s filings with securities regulators, including the Company’s most recent annual and interim MD&A, which are available on SEDAR at www.sedar.com.

DIFFERENCES IN UNITED STATES AND CANADIAN REPORTING PRACTICES

The Company is permitted, under a multijurisdictional disclosure system adopted by the United States, to prepare this report in accordance with Canadian disclosure requirements, which are different from those of the United States. The Company prepares its financial statements, which are filed with this Annual Report in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, and the audit is subject to Canadian auditing and auditor independence standards.

Disclosure regarding the Company’s mineral properties, including with respect to mineral reserve and mineral resource estimates included in this Annual Report, was prepared in accordance with NI 43-101. NI 43-101 is a rule developed by the Canadian Securities Administrators that establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. NI 43-101 differs significantly from the disclosure requirements of the Securities and Exchange Commission (the “SEC”) generally applicable to U.S. companies. Accordingly, information contained in this Annual Report is not comparable to similar information made public by U.S. companies reporting pursuant to SEC disclosure requirements.

5

INCORPORATED DOCUMENTS

Annual Information Form

The Registrant’s AIF is filed as Exhibit 99.1 to this Annual Report.

Management’s Discussion and Analysis

The Registrant’s management’s discussion and analysis (“MD&A”) is filed as Exhibit 99.2 to this Annual Report.

Audited Annual Financial Statements

The Registrant’s consolidated financial statements and auditor’s report thereon are filed as Exhibit 99.3 to this Annual Report.

DISCLOSURE CONTROLS AND PROCEDURES

A.Evaluation of disclosure controls and procedures. Disclosure controls and procedures are designed to ensure that (i) information required to be disclosed by the Company in reports that it files or submits to the Commission under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms and (ii) material information required to be disclosed in the Company’s reports filed under the Exchange Act is accumulated and communicated to the Company’s management, including its Co-Chief Executive Officers (“co-CEOs”) and its Chief Financial Officer (“CFO”), as appropriate, to allow for timely decisions regarding required disclosure.

At the end of the period covered by this report, an evaluation was carried out under the supervision of and with the participation of the Company’s management, including the co-CEOs and CFO, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act). The evaluation included documentation review, enquiries and other procedures considered by management to be appropriate in the circumstances. Based on that evaluation, the Company’s co-CEOs and CFO have concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were not effective, as a result of the material weakness identified during the Company’s assessment of its internal control over financial reporting.

B.Management’s report on internal control over financial reporting. This Annual Report does not include a report of management’s assessment regarding internal control over financial reporting due to a transition period established by rules of the SEC for newly public companies.
C.Attestation report of the registered public accounting firm. This Annual Report does not include an attestation report of the Company’s registered public accounting firm due to a transition period established by rules of the SEC for newly public companies.
D.Changes in internal control over financial reporting. During the period covered by this Annual Report, no change occurred in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

The Company’s management, including the co-CEOs and CFO, does not expect that its disclosure controls and procedures or internal controls and procedures will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual

6

acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

AUDIT COMMITTEE FINANCIAL EXPERT

The Company’s Board of Directors has determined that it has at least one audit committee financial expert serving on its Audit Committee. The Board has determined that Marcelo Freire de Paiva is an audit committee financial expert and is not independent, as that term is defined by the Exchange Act and the Nasdaq corporate governance standards applicable to the Company.

The Commission has indicated that the designation of a person as an audit committee financial expert does not make such person an “expert” for any purpose, impose on such person any duties, obligations or liability that are greater than those imposed on such person as a member of the Audit Committee and the Board in the absence of such designation and does not affect the duties, obligations or liability of any other member of the Audit Committee or Board.

CODE OF ETHICS

The Board has adopted a written code of business conduct and ethics (the “Code”), by which it and all officers and employees of the Company, including the Company’s principal executive officer, principal financial officer and principal accounting officer or controller, abide. There were no waivers granted in respect of the Code during the fiscal year ended December 31, 2021. The Code is posted on the Company’s website at www.sigmalithiumresources.com. If there is an amendment to the Code, or if a waiver of the Code is granted to any of Company’s principal executive officers, principal financial officer, principal accounting officer or controller, the Company intends to disclose any such amendment or waiver by posting such information on the Company’s website. Unless and to the extent specifically referred to herein, the information on the Company’s website shall not be deemed to be incorporated by reference in this Annual Report.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

KPMG LLP, Toronto, ON, Canada, Audit Firm ID: 85, acted as the Company’s independent registered public accounting firm for the fiscal year ended December 31, 2021. See page 88 of the Company’s Annual Information Form, which is attached hereto as Exhibit 99.1, for the total amount billed to the Company by KPMG LLP for services performed in the last two fiscal years by category of service (for audit fees, audit-related fees, tax fees and all other fees).

AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES

See page 87 of the Company’s Annual Information Form, which is attached hereto as Exhibit 99.1.No audit-related fees, tax fees or other non-audit fees were approved by the Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

OFF-BALANCE SHEET ARRANGEMENTS

During the year ended December 31, 2021, the Company was not a party to any off-balance-sheet arrangements that have, or are reasonably likely to have, a current or future effect on the financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, cash requirements or capital resources of the Company.

7

IDENTIFICATION OF THE AUDIT COMMITTEE

The Board has a separately designated standing Audit Committee established in accordance with section 3(a)(58)(A) of the Exchange Act and satisfies the requirements of Exchange Act Rule 10A-3. The Company’s Audit Committee is comprised of Gary Litwack, Frederico Marques and Marcelo Paiva, two of whom, in the opinion of the Company’s Board of Directors, are independent (as determined under Rule 10A-3 of the Exchange Act and the Nasdaq Rules) and all of whom are financially literate.

Marcelo Paiva, by virtue of his position as Managing Partner at A10 Investimentos Fundo de Investimento de Ações – Investimento no Exterior, is not considered independent. Marcelo Paiva serves as a member of our audit committee pursuant to the exemption from such independence requirements set forth in SEC Rule 10A-3(b)(1)(iv)(2). We believe that the Company’s reliance on such exemption does not materially adversely affect the ability of the audit committee to act independently.

CORPORATE GOVERNANCE PRACTICES

There are certain differences between the corporate governance practices applicable to the Company and those applicable to U.S. companies under the Nasdaq Corporate Governance Requirements. A summary of the significant differences can be found on the Registrant’s website at www.sigmalithiumresources.com. Information contained in or otherwise accessible through the Company’s website does not form part of this Annual Report, and is not incorporated into this Annual Report by reference.

MINE SAFETY

Not applicable.

8

UNDERTAKING AND CONSENT TO SERVICE OF PROCESS

A.Undertaking

The Company undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to: the securities in relation to which the obligation to file an annual report on Form 40-F arises; or transactions in said securities.

B.Consent to Service of Process

The Company has filed an Appointment of Agent for Service of Process and Undertaking on Form F-X with respect to the class of securities in relation to which the obligation to file this Annual Report arises.

9

EXHIBIT INDEX

Exhibit No.

    

Description

99.1

Annual Information Form for the year ended December 31, 2021

99.2

Management’s Discussion and Analysis for the year ended December 31, 2021

99.3

Consolidated financial statements for the years ended December 31, 2021 and 2020

99.4

Certificate of the Co-Chief Executive Officers required by Rule 13a-14(a) or Rule 15d-14(a), pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

99.5

Certificate of the Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a), pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

99.6

Certificate of the Co-Chief Executive Officers pursuant to 18 U.S.C. Section 1350, as enacted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

99.7

Certificate of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as enacted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

99.8

Consent of KPMG LLP, Independent Registered Public Accounting Firm

99.9

Consent of Marc-Antoine Laporte, P.Geo.

99.10

Consent of Jacques Parent, P.Eng., Ph.D.

99.11

Consent of Jarrett Quinn, P.Eng.

99.12

Consent of Porfirio Cabaleiro Rodriguez, B.Sc., M.Eng.

99.13

Consent of Homero Delboni Jr. B.E., M.Eng.Sc., Ph.D.

99.14

Consent of Jacqueline Wang, P.Eng.

99.15

Consent of Stephane Normandin, P. Eng.

99.16

Consent of Wes Roberts, P.Eng.

99.17

Consent of Guilherme Gomides Ferreira, B.Sc., M.Eng.

101

Interactive Data File (formatted as Inline XBRL)

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

SIGNATURE

Pursuant to the requirements of the Exchange Act, Sigma Lithium Corporation certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this annual report to be signed on its behalf by the undersigned, thereto duly authorized.

Dated: April 1, 2022

SIGMA LITHIUM CORPORATION

By:

/s/ Ana Cabral-Gardner

Name:  Ana Cabral-Gardner

Title:        Co-Chief Executive Officer

Exhibit 99.1

Graphic

Graphic

Annual Information Form

For the year ended December 31, 2021

April 1, 2022


Graphic

TABLE OF CONTENTS

INTERPRETATION

5

Definitions

5

CIM Definition Standards

5

CAUTIONARY NOTE REGARDING FORWARD LOOKING INFORMATION

6

CAUTIONARY NOTE REGARDING MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES

10

OTHER INFORMATION

10

Currency

10

Third Party Information

11

Non-GAAP Measures

11

Date of Information

11

STRUCTURE OF THE COMPANY

11

Name, Address and Incorporation

11

Intercorporate Relationships

12

GENERAL DEVELOPMENT OF THE BUSINESS

12

Overview

12

Three Year History

12

Operations

13

Environmental Social and Governance

15

DESCRIPTION OF THE BUSINESS

20

Overview

20

Lithium Properties

20

Royalties

30

Life Cycle Analysis and Net Zero Strategy

31

Environmental Licensing and Permitting

31

Surface Rights and Other Permitting

32

Specialized Skills and Knowledge

32

Mineral Price and Economic Cycles

33

Economic Dependence

33

Bankruptcy and Similar Procedures

33

Reorganizations

33

Foreign Operations

33

Employees

33

Environmental Protection

33

Social and Environmental Policies

33

SUMMARY OF UPDATED FEASIBILITY STUDY REPORT

33

PROPERTY DESCRIPTION AND LOCATION

34

ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

34

HISTORY

34

GEOLOGICAL SETTING AND MINERALIZATION

35

EXPLORATION

36

DRILLING

36

SAMPLE PREPARATION, ANALYSES AND SECURITY

36

DATA VERIFICATION

38

MINERAL PROCESSING AND METALLURGICAL TESTING

38

First Mine

38

Second Mine

39

MINERAL RESOURCE ESTIMATES

39


Graphic

MINERAL RESERVE ESTIMATES

43

MINING METHODS

44

First Mine

44

Second Mine

44

RECOVERY METHODS

45

Processing Plant Description

45

Design Criteria and Utilities Requirements

45

PROJECT INFRASTRUCTURE

46

Buildings, Roads, Fuel Storage, Power Supply and Water Supply

46

Waste Rock and Tailings Disposal and Stockpiles

46

Control Systems and Communication

47

MARKET STUDIES AND CONTRACTS

47

Demand and Consumption

47

Supply

47

Contracts

47

Price Forecast

48

ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL OR COMMUNITY IMPACT

48

Applicable Legal Requirements for Project Environmental Permitting

48

Current Project Environmental Permitting Status

48

Authorizations

49

Land Access

49

Social License Considerations

49

Rehabilitation, Closure Planning and Post-Closure Monitoring

50

Second Mine Environmental Work to Date

50

CAPITAL AND OPERATING COSTS

50

Capital Costs First Mine

50

Operating Costs First Mine

51

Plant CAPEX and OPEX Second Mine

51

Mining Capital Costs Second Mine

51

Mining Operating Costs Second Mine

52

ECONOMIC ANALYSIS

52

Production Phase 1

52

Production Phase 2

56

INTERPRETATION AND CONCLUSIONS

58

Risk Assessment

58

Opportunities

58

RECOMMENDATIONS

59

Geology and Resources

59

First Mine Recommendations

59

Second Mine Project Recommendations

59

Competitive Conditions and Anticipated Trends

60

Emerging Market Disclosure

62

RISK FACTORS

64

Risk Factors

64

Risks Related to Resource Development

65

DESCRIPTION OF CAPITAL STRUCTURE

79

Common Shares

79

DIVIDENDS AND DISTRIBUTIONS

80

MARKET FOR SECURITIES

80

Market

80

Trading Price and Volume

80


Graphic

PRIOR SALES

81

DIRECTORS AND OFFICERS

81

Name and Occupation

81

Shareholdings of Directors and Officers

85

Cease Trade Orders, Bankruptcies, Penalties or Sanctions

85

Committees of the Board

85

Conflicts of Interest

86

AUDIT COMMITTEE INFORMATION

86

Audit Committee Charter

86

Composition of the Audit Committee

86

Relevant Education and Experience

87

Audit Committee Oversight

87

Reliance on Certain Exemptions

87

Pre-Approval Policies and Procedures

87

Audit Fees

88

LEGAL PROCEEDINGS AND REGULATORY ACTIONS

88

INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

88

TRANSFER AGENT AND REGISTRAR

88

MATERIAL CONTRACTS

88

INTERESTS OF EXPERTS

88

ADDITIONAL INFORMATION

89

SCHEDULE “A” AUDIT COMMITTEE CHARTER

90

EXHIBIT “A” TO THE AUDIT COMMITTEE CHARTER

95

SCHEDULE “B” DEFINITIONS

97


Graphic

INTERPRETATION

Definitions

For a description of defined terms and other reference information used in this Annual Information Form (this AIF), please refer to Schedule B.

CIM Definition Standards

The disclosure included in this AIF uses mineral resources and mineral reserves classification terms that comply with reporting standards in Canada. All mineral resource and mineral reserve estimates are made in accordance with the CIM Definition Standards and NI 43-101, which is a set of rules developed by the Canadian Securities Administrators that establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects and operations. The following definitions are reproduced from the CIM Definition Standards:

A mineral resource is a concentration or occurrence of solid material of economic interest in or on the Earths crust in such form, grade or quality and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade or quality, continuity and other geological characteristics of a mineral resource are known, estimated or interpreted from specific geological evidence and knowledge, including sampling. Mineral resources are sub-divided, in order of increasing geological confidence, into inferred, indicated and measured categories, which are defined as follows:

·

An inferred mineral resource is that part of a mineral resource for which quantity, grade or quality are estimated on the basis of limited geological evidence and sampling. Geological evidence is sufficient to imply but not verify geological and grade or quality continuity. An inferred mineral resource has a lower level of confidence than that applying to an indicated mineral resource and must not be converted to a mineral reserve. It is reasonably expected that the majority of inferred mineral resources could be upgraded to indicated mineral resources with continued exploration.

·

An indicated mineral resource is that part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics are estimated with sufficient confidence to allow the application of modifying factors (as defined below) in sufficient detail to support mine planning and evaluation of the economic viability of the deposit. Geological evidence is derived from adequately detailed and reliable exploration, sampling and testing and is sufficient to assume geological and grade or quality continuity between points of observation. An indicated mineral resource has a lower level of confidence than that applying to a measured mineral resource and may only be converted to a probable mineral reserve.

·

A measured mineral resource is that part of a mineral resource for which quantity, grade or quality, densities, shape, and physical characteristics are estimated with confidence sufficient to allow the application of modifying factors to support detailed mine planning and final evaluation of the economic viability of the deposit. Geological evidence is derived from detailed and reliable exploration, sampling and testing and is sufficient to confirm geological and grade or quality continuity between points of observation. A measured mineral resource has a higher level of confidence than that applying to either an indicated mineral resource or an inferred mineral resource. It may be converted to a proven mineral reserve or to a probable mineral reserve.

Modifying factors are considerations used to convert mineral resources to mineral reserves. These include, but are not restricted to, mining, processing, metallurgical, infrastructure, economic, marketing, legal, environmental, social and governmental factors.

A mineral reserve is the economically mineable part of a measured and/or indicated mineral resource. It includes diluting materials and allowances for losses, which may occur when the material is mined or extracted and is defined by studies at pre-feasibility or feasibility level as appropriate that include application of modifying factors. Such studies demonstrate that, at the time of reporting, extraction

5

2021 ANNUAL INFORMATION FORM


Graphic

could reasonably be justified. Mineral reserves are sub-divided, in order of increasing geological confidence, into probable and proven categories, which are defined as follows:

·

A probable mineral reserve is the economically mineable part of an indicated, and in some circumstances, a measured mineral resource. The confidence in the modifying factors applying to a probable mineral reserve is lower than that applying to a proven mineral reserve.

·

A proven mineral reserve is the economically mineable part of a measured mineral resource. A proven mineral reserve implies a high degree of confidence in the modifying factors.

CAUTIONARY NOTE REGARDING FORWARD LOOKING INFORMATION

Certain information and statements in this AIF may constitute forward looking information within the meaning of Canadian securities legislation and forward looking statements within the meaning of U.S. securities legislation (collectively, Forward Looking Information), which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such Forward Looking Information. All statements, other than statements of historical fact, may be Forward Looking Information, including, but not limited to, mineral resource or mineral reserve estimates (which reflect a prediction of mineralization that would be realized by development). When used in this AIF, such statements generally use words such as may, would, could, will, intend, expect, believe, plan, anticipate, estimate and other similar terminology. These statements reflect managements current expectations regarding future events and operating performance and speak only as of the date of this AIF. Forward Looking Information involves significant risks and uncertainties, should not be read as guarantees of future performance or results, and does not necessarily provide accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the Forward Looking Information, which is based upon what management believes are reasonable assumptions, and there can be no assurance that actual results will be consistent with the Forward Looking Information.

In particular (but without limitation), this AIF contains Forward Looking Information with respect to the following matters: statements regarding anticipated decision making with respect to the Project; capital expenditure programs; estimates of mineral resources and mineral reserves; development of mineral resources and mineral reserves; government regulation of mining operations and treatment under governmental and taxation regimes; the future price of commodities, including lithium; the realization of mineral resource and mineral reserve estimates, including whether mineral resources will ever be developed into mineral reserves; the timing and amount of future production; currency exchange and interest rates; expected outcome and timing of environmental surveys and permit applications and other environmental matters; the Companys ability to raise capital and obtain project financing; expected expenditures to be made by the Company on its properties; successful operations and the timing, cost, quantity, capacity and quality of production; capital costs, operating costs and sustaining capital requirements, including the cost of construction of the processing plant for the Project; and competitive conditions and anticipated trends post-COVID-19 pandemic and the ongoing uncertainties and effects in respect of the COVID-19 pandemic and the military conflict in Ukraine.

Forward Looking Information does not take into account the effect of transactions or other items announced or occurring after the statements are made. Forward Looking Information is based upon a number of expectations and assumptions and is subject to a number of risks and uncertainties, many of which are beyond the Companys control, that could cause actual results to differ materially from those disclosed in or implied by such Forward

Looking Information. With respect to the Forward Looking Information, the Company has made assumptions regarding, among other things:

·

General economic and political conditions (including but not limited to the impact of the continuance or escalation of the military conflict between Russia and Ukraine, and economic sanctions in relation thereto).

·

Stable and supportive legislative, regulatory and community environment in the jurisdictions where the Company operates.

6

2021 ANNUAL INFORMATION FORM


Graphic

·

Stability and inflation of the Brazilian Real, including any foreign exchange or capital controls which may be enacted in respect thereof, and the effect of current or any additional regulations on the Companys operations.

·

Anticipated trends and effects in respect of the COVID-19 pandemic and post-pandemic.

·

Demand for lithium, including that such demand is supported by growth in the electric vehicle (EV) market.

·

Estimates of, and changes to, the market prices for lithium.

·

The impact of increasing competition in the lithium business and the Companys competitive position in the industry.

·

The Companys market position and future financial and operating performance.

·

The Companys estimates of mineral resources and mineral reserves, including whether mineral resources will ever be developed into mineral reserves.

·

Anticipated timing and results of exploration, development and construction activities.

·

Reliability of technical data.

·

The Companys ability to develop and achieve production at the Project.

·

The Companys ability to obtain financing on satisfactory terms to develop the Project.

·

The Companys ability to obtain and maintain mining, exploration, environmental and other permits, authorizations and approvals for the Project.

·

The timing and outcome of regulatory and permitting matters for the Project.

·

The exploration, development, construction and operational costs for the Project.

·

The accuracy of budget, construction and operations estimates for the Project.

·

Successful negotiation of definitive commercial agreements, including off-take agreements for the Project.

·

The Companys ability to operate in a safe and effective manner.

Although management believes that the assumptions and expectations reflected in such Forward Looking Information are reasonable, there can be no assurance that these assumptions and expectations will prove to be correct. Since Forward Looking Information inherently involves risks and uncertainties, undue reliance should not be placed on such information.

The Companys actual results could differ materially from those anticipated in any Forward Looking Information as a result of various known and unknown risk factors, including (but not limited to) the risk factors referred to under the heading Risk Factors in this AIF. Such risks relate to, but are not limited to, the following:

·

The Company may not develop the Project into a commercial mining operation.

·

There can be no assurance that market prices for lithium will remain at current levels or that such prices will improve.

·

The market for electric vehicles (EVs) and other large format batteries currently has limited market share and no assurances can be given for the rate at which this market will develop, if at all, which could affect the success of the Company and its ability to develop lithium operations.

·

Changes in technology or other developments could result in preferences for substitute products.

·

New production of lithium hydroxide or lithium carbonate from current or new competitors in the lithium markets could adversely affect prices.

7

2021 ANNUAL INFORMATION FORM


Graphic

·

The Project is at development stage and the Companys ability to succeed in progressing through development to commercial operations will depend on a number of factors, some of which are outside its control.

·

The Companys financial condition, operations and results of any future operations are subject to political, economic, social, regulatory and geographic risks of doing business in Brazil.

·

Violations of anti-corruption, anti-bribery, anti-money laundering and economic sanctions laws and regulations could materially adversely affect the Companys business, reputation, results of any future operations and financial condition.

·

The Company is subject to regulatory frameworks applicable to the Brazilian mining industry which could be subject to further change, as well as government approval and permitting requirements, which may result in limitations on the Companys business and activities.

·

The Companys operations are subject to numerous environmental laws and regulations and expose the Company to environmental compliance risks, which may result in significant costs and have the potential to reduce the profitability of operations.

·

Physical climate change events and the trend toward more stringent regulations aimed at reducing the effects of climate change could have an adverse effect on the Companys business and future operations.

·

As the Company does not have any experience in the construction and operation of a mine, processing plants and related infrastructure, it is more difficult to evaluate the Companys prospects, and the Companys future success is more uncertain than if it had a more proven history of developing a mine.

·

The Companys future production estimates are based on existing mine plans and other assumptions which change from time to time. No assurance can be given that such estimates will be achieved.

·

The Company may experience unexpected costs and cost overruns, problems and delays during construction, development, mine start-up and operations for reasons outside of the Companys control, which have the potential to materially affect its ability to fully fund required expenditures and/or production or, alternatively, may require the Company to consider less attractive financing solutions.

·

The Companys capital and operating cost estimates may vary from actual costs and revenues for reasons outside of the Companys control.

·

The Companys operations are subject to the high degree of risk normally incidental to the exploration for, and the development and operation of, mineral properties.

·

Insurance may not be available to insure against all such risks, or the costs of such insurance may be uneconomic. Losses from uninsured and underinsured losses have the potential to materially affect the Companys financial position and prospects.

·

The Company is subject to risks associated with securing title and property interests.

·

The Company is subject to strong competition in Brazil and in the global mining industry.

·

The Company may become subject to government orders, investigations, inquiries or other proceedings (including civil claims) relating to health and safety matters, which could result in consequences material to its business and operations.

·

The Companys mineral resource and mineral reserve estimates are estimates only and no assurance can be given that any particular level of recovery of minerals will in fact be realized or that identified mineral resources or mineral reserves will ever qualify as a commercially mineable (or viable) deposit.

·

The Companys operations and the development of its projects may be adversely affected if it is unable to maintain positive community relations.

·

The Company is exposed to risks associated with doing business with counterparties, which may impact the Companys operations and financial condition.

8

2021 ANNUAL INFORMATION FORM


Graphic

·

Any limitation on the transfer of cash or other assets between the Company and the Companys subsidiaries, or among such entities, could restrict the Companys ability to fund its operations efficiently.

·

The Company is subject to risks associated with its reliance on consultants and others for mineral exploration and exploitation expertise.

·

The current COVID-19 pandemic could have a material adverse effect on the Companys business, operations, financial condition and stock price.

·

The current military conflict in Ukraine and the economic or other sanctions imposed may impact global markets in such a manner as to have a material adverse effect on the Companys business, operations, financial condition and stock price.

·

If the Company is unable to ultimately generate sufficient revenues to become profitable and have positive cash flows, it could have a material adverse effect on its prospects, business, financial condition, results of operations or overall viability as an operating business.

·

The Company is subject to liquidity risk and therefore may have to include a going concern note in its financial statements.

·

The Company may not be able to obtain sufficient financing in the future on acceptable terms, which could have a material adverse effect on the Companys business, results of operations and financial condition. In order to obtain additional financing, the Company may conduct additional (and possibly dilutive) equity offerings or debt issuances in the future.

·

The Company may be unable to achieve cash flow from operating activities sufficient to permit it to pay the principal, premium, if any, and interest on the Companys indebtedness, or maintain its debt covenants.

·

The Company has not declared or paid dividends in the past and may not declare or pay dividends in the future.

·

The Company will incur increased costs as a result of being a public company both in Canada listed on the TSXV and in the United States listed on the Nasdaq Capital Market (Nasdaq), and its management will be required to devote further substantial time to United States public company compliance efforts.

·

If the Company does not maintain adequate and appropriate internal controls over financial reporting as outlined in accordance with NI 52-109 or the Rules and Regulations of the SEC, the Company will have to report a material weakness and disclose that the Company has not maintained appropriate internal controls over financial reporting.

·

As a foreign private issuer, the Company is subject to different U.S. securities laws and rules than a domestic U.S. issuer, which may limit the information publicly available to its shareholders.

·

Failure to retain key officers, consultants and employees or to attract and, if attracted, retain additional key individuals with necessary skills could have a materially adverse impact upon the Companys success.

·

The Company is subject to currency fluctuation risks.

·

From time to time, the Company may become involved in litigation, which may have a material adverse effect on its business financial condition and prospects.

·

Certain directors and officers of the Company are, or may become, associated with other natural resource companies which may give rise to conflicts of interest.

·

The market price for the Companys shares may be volatile and subject to wide fluctuations in response to numerous factors beyond its control, and the Company may be subject to securities litigation as a result.

·

If securities or industry analysts do not publish research or reports about the Companys business, or if they downgrade the Common Shares, the price of the Common Shares could decline.

·

The Company will have broad discretion over the use of the net proceeds from offerings of its securities.

·

There is no guarantee that the Common Shares will earn any positive return in the short term or long term.

9

2021 ANNUAL INFORMATION FORM


Graphic

·

The Company has a major shareholder which owns 47.2% of the outstanding Common Shares and, as such, for as long as such shareholder directly or indirectly maintains a significant interest in the Company, it may be in a position to affect the Companys governance, operations and the market price of the Common Shares.

·

As the Company is a Canadian corporation but most of its directors and officers are not citizens or residents of Canada or the U.S., it may be difficult or impossible for an investor to enforce judgements against the Company and its directors and officers outside of Canada and the U.S. which may have been obtained in Canadian or U.S. courts or initiate court action outside Canada or the U.S. against the Company and its directors and officers in respect of an alleged breach of securities laws or otherwise. Similarly, it may be difficult for U.S. shareholders to effect service on the Company to realize on judgments obtained in the United States.

·

The Company is governed by the Canada Business Corporations Act and by the securities laws of the province of Ontario, which in some cases have a different effect on shareholders than U.S. corporate laws and U.S. securities laws.

·

The Company is subject to risks associated with its information technology systems and cyber-security.

·

The Company may be a Passive Foreign Investment Company, which may result in adverse U.S. federal income tax consequences for U.S. holders of Common Shares.

Readers are cautioned that the foregoing lists of assumptions and risks is not exhaustive. The Forward Looking Information contained in this AIF is expressly qualified by these cautionary statements. All Forward Looking Information in this AIF speaks as of the date of this AIF. The Company does not undertake any obligation to update or revise any Forward Looking Information, whether as a result of new information, future events or otherwise, except as required by applicable securities law. Additional information about these assumptions, risks and uncertainties is contained in the Companys filings with securities regulators, including the Companys most recent annual and interim MD&A, which are available on SEDAR at www.sedar.com.

CAUTIONARY NOTE REGARDING MINERAL RESOURCE

AND MINERAL RESERVE ESTIMATES

Technical disclosure regarding the Companys properties included in this AIF, and in the documents incorporated herein by reference has not been prepared in accordance with the requirements of U.S. securities laws. Without limiting the foregoing, such technical disclosure uses terms that comply with reporting standards in Canada and estimates are made in accordance with NI 43-101. Unless otherwise indicated, all mineral reserve and mineral resource estimates contained in the technical disclosure have been prepared in accordance with NI 43-101 and the CIM Definition Standards.

Under the SEC rules regarding disclosure of technical information, the definitions of proven mineral reserves and probable mineral reserves are substantially similar to the corresponding CIM Definition Standards, and the SEC recognizes measured mineral resources, indicated mineral resources and inferred mineral resources which are also substantially similar to the corresponding CIM Definition Standards. However, there are still differences in the definitions and standards under the SEC rules and the CIM Definition Standards. Therefore, the Companys mineral resources and reserves as determined in accordance with NI 43-101 may be significantly different than if they had been determined in accordance with the SEC rules.

OTHER INFORMATION

Currency

This AIF contains references to United States dollars, Canadian dollars and Brazilian Reais. All dollar amounts referenced, unless otherwise indicated, are expressed in Canadian dollars Cdn$. United States dollars are referred to as US$. Brazilian Reais are referred to as R$.

10

2021 ANNUAL INFORMATION FORM


Graphic

The following table sets forth the high and low, average and period-end exchange rates for one US dollar expressed in Canadian dollars and Brazilian Reais for each period indicated, based upon the daily exchange rates provided by the Bank of Canada and FactSet:

    

2021

    

2020

High

 

Cdn$1.29/R$5.81

 

Cdn$1.45/R$5.93

Low

 

Cdn$1.20/R$4.92

 

Cdn$1.27/R$4.02

Rate at end of period

 

Cdn$1.27/R$5.57

 

Cdn$1.27/R$5.19

Average rate for period

 

Cdn$1.25/R$5.40

 

Cdn$1.34/R$5.15

On April 1, 2022, the rate for Canadian dollars (as quoted by the Bank of Canada) and Brazilian Reais in terms of the United States dollar was US$1.00 = Cdn$1.25/R$4.66.

Third Party Information

This AIF includes market, industry and economic data and projections obtained from various publicly available sources and other sources believed by the Company to be true. Although the Company believes these to be reliable, it has not independently verified the information from third party sources, or analyzed or verified the underlying reports relied upon or referred to by the third parties, or ascertained the underlying economic and other assumptions relied upon by the third parties. The Company believes that the market, industry and economic data and projections are accurate and that the estimates and assumptions are reasonable, but there can be no assurance as to their accuracy or completeness. The accuracy and completeness of the market, industry and economic data and projections in this AIF are not guaranteed and the Company does not make any representation as to the accuracy or completeness of such information.

Non-GAAP Measures

This AIF and the Updated Feasibility Study Report incorporated by reference herein contains certain non-GAAP measures. The non-GAAP measures do not have any standardized meaning within IFRS and therefore may not be comparable to similar measures presented by other companies. These measures provide information that is customary in the mining industry and that is useful in evaluating the Project. This data should not be considered as a substitute for measures of performance prepared in accordance with IFRS.

Qualified Person

Mr. Wes Roberts, P.Eng., a member of the technical committee of the Company, is the qualified person under NI 43-101 who reviewed and approved the technical information disclosed in this AIF and the documents incorporated by reference herein.

Date of Information

Except as otherwise indicated, all information disclosed in this AIF is as of April 1, 2022.

STRUCTURE OF THE COMPANY

Name, Address and Incorporation

Sigma Lithium Corporation (the Company or Sigma) is domiciled in Canada and was incorporated under the Canada Business Corporations Act on June 8, 2011 originally under the name Margaux Red Capital Inc. The current business of Sigma was acquired through a reverse take-over transaction on April 30, 2018 pursuant to which the Company acquired Sigma Lithium Resources Inc (Sigma Holdings) which held (and continues to hold) the Grota do Cirilo Project, located in the state of Minas Gerais in Brazil (the Project) through a Brazilian wholly-owned subsidiary, Sigma Mineração S.A. (Sigma Brazil). On completion of the reverse take-over transaction, the Company implemented a share consolidation. On July 5, 2021, the Company changed its name from Sigma Lithium Resources Corporation to Sigma Lithium Corporation.

11

2021 ANNUAL INFORMATION FORM


Graphic

The registered office of the Company is at Suite 2200, HSBC Building, 885 West Georgia St. Vancouver, BC V6C 3E8 Canada and the head office of the Company is Avenida Nove de Julho 4939, 9th Floor, Torre Europa, Itaim, Sao Paulo, Sao Paulo, 01407-200. The Companys web site is www.sigmalithium.ca.

Intercorporate Relationships

The corporate structure of the Company, its subsidiaries, the jurisdiction of incorporation of such corporations and the percentage of equity ownership are set out in the following chart:

Graphic

GENERAL DEVELOPMENT OF THE BUSINESS

Overview

Sigma is a Canadian mineral processing and development company, focused on advancing, with an environmental sustainability directed strategy, one of the largest hardrock lithium projects in the Americas - its wholly-owned Grota do Cirilo Project in Brazil, with the goal of participating in the rapidly expanding lithium-ion battery supply chain for EVs. For further information on the business of the Company, please refer to Description of the Business.

Three Year History

The following is a summary of the key developments that have generally influenced the development of the Companys business and projects over the last three years.

12

2021 ANNUAL INFORMATION FORM


Graphic

Operations

The Company continues to advance toward initiating commercial production in 2023. On December 6, 2021, the Company announced the commencement of construction on site to build the foundation and infrastructure installation for its greentech DMS Production Plant, which was completed at the end of the first quarter of 2022. This stage comprised the earthworks necessary for installation of the Production Plant and infrastructure foundations. Approximately one million cubic meters of soil/subsoils was moved, employing a workforce of approximately 300 personnel.

The Company successfully completed several workstreams involved in the pre-construction of the Production Plant within its schedule and budget parameters. In 2021, the Company reached major milestones towards engineering and construction, despite challenging circumstances created by the COVID-19 pandemic.

The Company is managing three interconnected workstreams aimed to develop the Project as a whole:

·

the completion of Front-End Engineering and Design (FEED) and commencement of execution and management of construction activities for Production Phase 1 and the Production Plant;

·

the completion of the pre-feasibility study of Production Phase 2, aimed at a potential production expansion; and

·

the continued exploration and expansion of the Projects estimated mineral resources, with the objective of increasing the Projects mine life and/or a potential Production Phase 3 expansion scenario.

For further information on Production Phase 1, Production Phase 2 and Production Phase 3, please refer to Description of the Business Current Status of the Project.

In relation to the Production Phase 1 workstream, the FEED was finalized in December 2021. The final capital expenditure (CAPEX) budget with a Project Execution Plan (PEP) was also completed in December 2021. The Company issued letters of intent (LOIs) for long lead items to vendors in order to start vendor design and detailed design by Primero Group Ltd (Primero) and Promon Engenharia Ltda. (Promon).

Following the successful conclusion of the first phase of FEED, Promon and Primero will remain engaged by the Company and continue to focus on negotiating and securing long lead items for the construction of the Production Plant. The Company is currently negotiating an agreement for the engineering, procurement, and construction management (EPCM) of the Production Plant and associated infrastructure with both engineering firms. The Company is also in negotiations with two finalist mining contractors to build and operate the First Mine.

The Company continued to demonstrate the unique extent and high-purity quality of its hard rock lithium mineralization for the Project and its commercial and market relevance by having significantly advanced its strategic goals on three fronts: short term production scheduled for 2023, the viability of a near-term production expansion contemplated for 2024, and the determination of the ultimate extent of mineral resources at the Project, all while maintaining its strategic leadership in ESG in the lithium supply chain.

For further information on the Project, please refer to Description of the Business Current Status of the Project.

On December 1, 2021, the Company filed on SEDAR the Updated Feasibility Study Report in respect of its preliminary economic assessment on Production Phase 2 of the Project. The Updated Feasibility Study Report was prepared by leading mining consultancies and the professional services firms Primero, SGS Canada Lakefield (SGS), and GE21 Consultoria Mineral (GE21). Please refer to Description of the Business Current Status of the Project and Summary of Updated Feasibility Study Report. This approach was the result of a thorough review of the Company´s strategic priorities, with the objective of potentially responding to a significant increase in demand from its customers and solidifying its unique market position as a future supplier of high purity 6% battery grade lithium concentrate (Battery Grade Green and Sustainable Lithium). It also aims to significantly increase both the scale of the Project and its commercial and market importance on three fronts: (i) future production, (ii) scale of mineral reserves and (iii) scale of mineral resources, all while maintaining its battery grade green lithium products and the Companys strategic leadership in ESG in the lithium supply chain.

13

2021 ANNUAL INFORMATION FORM


Graphic

The Company (prior to the severe second wave of COVID-19) revised its strategy regarding certain international third-party engineering service providers and replaced them with Brazil-based specialists, anticipating the severely restrictive global travel bans that followed in the fourth quarter of 2020 as a result of the second wave. This pre-emptive change enabled the Company to successfully complete all field activities on time and on budget, and to continue to execute engineering activities during the rest of 2021.

In that regard, the Company has also made significant progress in further strengthening its project team, aligning and defining scope requirements as well as advancing the Projects execution strategy. The Company has added several senior professionals as part of its project implementation team. Key Project consultants include a mix of experienced Brazilian and international engineers actively engaged on or off site to work alongside its existing team of GE21, MDGeo Hidrogeologia e Meio Ambiente (MDGEO), APL Engenharia (APL), Primero, SGS, Metso-Outotec (Metso) and SRK Consulting Inc (SRK).

The Company added two senior project management professionals to lead the Project Management Office (PMO): a senior mineral processing engineer and a senior geotechnical geologist. They report to Calvyn Gardner, one of the Companys co-CEOs, who has primary responsibility for all technical workstreams and has been based full time at the Project since August 2020. This core team has been providing valuable oversight on project delivery, while interfacing with the detailed engineering team, construction contractors, equipment vendors and other stakeholders, aligning them to the Project objectives. The PMO has established standard management processes and strategies regarding project execution, contract management, project delivery and document controls.

In addition, following the listing on the Nasdaq, the corporate finance and business development teams were also strengthened with the addition of two senior professionals: the company appointed a new CFO and a Director of Business Development and Investor Relations.

Overall, although working under a strict COVID-19 Protocol (the Protocol), the Company made significant progress in 2021. The Protocol was developed in conjunction with Brazilian health advisors, who are consulted on a regular basis to refine and adapt the Protocol to respond to the evolving COVID-19 situation in Brazil. An average of 86 people worked at the Project site, of which only 20 tested positive for COVID-19. They received prompt medical assistance and have fully recovered. Since the implementation of the Protocol, the Company has not reported any new cases on site. Nevertheless, the COVID-19 situation in Brazil remains challenging. The Company has been actively monitoring any additional impacts on pre-construction activities and the pre-construction schedule. Mandatory mask wearing on site and premises, physical distancing requirements and additional sanitary measures, along with testing measures for workers accessing the site, have brought delays to the previously expected timing to commence production of the fourth quarter of 2022. In addition, the Company continues to support the municipalities of Itinga and Araçuaí in their ongoing response to the pandemic (please refer to Environmental Social and Governance).

Further to the information referenced above regarding Production Phase 1, based on the design considered by the Updated Feasibility Study Report, the Production Plant will have the capacity to process 1.5 million metric tonnes of mineralized spodumene material per year from the Project. The Production Plant design is projected to produce 220,000 tonnes of Battery Grade Green and Sustainable Lithium per annum, with one of the lowest reported levels of impurities in the world. The Updated Feasibility Study Report assumes: (i) conventional open-pit mining operation; (ii) a low risk approach, building a commercial production plant utilizing conventional lithium Dense Media Separation (DMS) and attributing a conservative recovery rate of 60%, (iii) average annual production of 220,000 tonnes of Battery Grade Green and Sustainable Lithium, (iv) a mine life of 9.2 years, (v) projected cash operating costs of US$238 per tonne of Battery Grade Green and Sustainable Lithium (cash cost CIF China of US$ 342 per tonne of Battery Grade Green and Sustainable Lithium), among the lowest reported costs globally. The Updated Feasibility Study Report estimates were prepared using a cut-off grade of 0.5% Li2O and include: (i) a Mineral Reserves estimate of 10.27 million tonnes of proven reserves with average 1.45% Li2O content and 3.52 million tonnes of probable reserves with 1.47% Li2O content, and (ii) a Mineral Resources estimate of 26.34 million tonnes of measured resources with average 1.39% Li2O content, 19.44 million tonnes of indicated resources with average 1.37% Li2O content and 6.6 million tonnes of inferred resources (representing approximately 1,560,919 tonnes of LCE in the measured and indicated categories, with a further 220,070 tonnes LCE in the inferred category).

The positive economics reflected in the Updated Feasibility Study Report provides a strong platform to continue developing the Companys extensive mineral properties at the Project, which includes nine past-producing lithium mines.

14

2021 ANNUAL INFORMATION FORM


Graphic

On November 6, 2019, the Company filed the Feasibility Study Report on Production Phase 1 and the Production Plant.

Since the fourth quarter of 2018, the Company has been producing low carbon high purity lithium concentrate at an on-site demonstration pilot plant and has shipped samples to potential customers for product certification and testing (the Demonstration Plant). The production from the Demonstration Plant has been an important part of the Companys successful commercial strategy for its Battery Grade Green and Sustainable Lithium.

On March 23, 2018, Sigma Holdings published a technical report relating to the Project titled Technical Report, Northern and Southern Complexes Project, Araçuaí and Itinga, Brazil with an effective date of January 29, 2018 and prepared by Marc-Antoine Laporte, P. Geo, of SGS.

Environmental, Social and Governance

In March 2022, Ana Cabral-Gardner, the co-CEO of the Company, presented at the Bank of America Securities 2022 Global Agriculture and Materials Conference and at the BMO 31st Global Metals & Mining Conference on the growing demand for lithium and how projects such as the Project can play a key role in the energy transition and future of clean mobility.

In November 2021, Ana Cabral-Gardner was nominated by a national focal point (NFP) as a representative to the United Nations (UN) Convention on Climate Change. She actively participated in the event as a speaker, including a panel on the theme Circular Economy and the 21st Century City: Unlocking the Social & Environmental Benefits of the Sustainable City, presenting the Companys project to recycle tailings from its greentech plant and the ensuing economic development impact for the region. Ana also spoke at the main event/Blue Zone regarding The Future of ESG Investing: Enabling the Energy Transition to a Net Zero World.

In September 2021, the Company announced the constitution of an environmental sustainability and social impact committee (the ESG Committee), created to assist the Board with its ESG centric strategy. Ana Cabral-Gardner and Marcelo Paiva were appointed as co-Chairs of the ESG Committee. Maria Salum, Chief Sustainability Officer will act as senior advisor to the ESG Committee. The purpose of the committee is to advise and support co-CEOs Ana Cabral-Gardner and Calvyn Gardner in determining and implementing the Companys wide range

environmental and social sustainability initiatives, based on the selected sustainable development goals (the Mission Critical SDGs) for each of the two aspects of ESG: E environmental and S social. There are two key initiatives that will be the focus of the Committee: (i) establishing the Investment Agency which encompasses the coordination of the social programs of the Company; and (ii) overseeing strategy and coordinating with Boards Technical Committee to drive the Company to its ambitious net zero 2024 targets (measured as emissions minus carbon credits), within this Decade of Action and 26 years ahead of United Nations 2050 targets.

In September 2021, Ana Cabral-Gardner, co-CEO, was invited to the UN High-Level Dialogue on Energy Transition that took place in tandem with the UN General Assembly in New York. The Company demonstrated its alignment with the Paris Climate Accord and submitted an Energy Compact proposal committing to supply the production levels of lithium materials to enable energy transition. The Company targeted to reach net zero carbon emissions after its second year of production in 2024 (26 years ahead of UN targets for net zero emissions in 2050 and six years ahead of UN Decade of Action targets outlined at 2030 Agenda for Sustainable Development and the Paris Agreement on climate change).

Earlier in 2021, the Company commissioned two assessments of its net carbon footprint. It conducted an independent ISO 14000 compliant audit of its life cycle analysis, and is in process to complete an independent expert validation of its carbon credits generated by its internal preservation, reforestation, and compensation forestry programs.

Following the principles of the United Nations Sustainable Development Goals (UN-SDGs), in particular UN-SDG #11 (sustainable cities) and UN-SDG #8 (decent work and economic growth), the Company is leading the creation, structuring and operations of an independent agency to promote private investment and economic diversification of the Vale do Jequitinhonha region, where the Project is located (the Investment Agency). The Investment Agency aims to transform the region with organized activities to stimulate

15

2021 ANNUAL INFORMATION FORM


Graphic

development, contributing to the diversification of the business environment through the attraction of investments to the two municipalities of Araçuaí and Itinga in Brazil.

The Company has successfully obtained institutional support for the Investment Agency from the government of Minas Gerais and the Secretary of Special Development Projects (INDI) and from the mayors of Araçuaí and Itinga, following the principles of UN-SDG #17 (partnership for the goals). The Company engaged TSX Advisors Ltda (TSX Advisors), a specialist consulting firm, to lead the project to structure and implement the Investment Agency. TSX Advisors has a successful track record of executing similar projects for Brazil´s largest mining companies. At a ceremony presided over by the Vice Governor of Minas Gerais, the Investment Agency was launched in September 2021, during the week celebrating the 150 years of establishment of the town of Araçuai.

In 2021, consistent with the Companys ESG-centric strategy and commitment to the social objective UN-SDG #8 of decent work and economic growth, the Company was actively engaged through multiple ESG initiatives in supporting the communities where the Project is located in the Vale do Jequitinhonha, in Brazil, one of the poorest areas in the world.  The Company is committed to strengthening of the regional socioeconomic environment for the two municipalities. The Company has a strong working relationship with the municipalities of Itinga and Araçuaí and conducts regular and meaningful engagement and consultation with them.

The Company is contributing to the sustainable development of the region as it advances the construction of the Production Plant towards commercial production. The Company has been executing the following ESG initiatives:

“Zero Hunger Action: The Company has extended humanitarian relief action for an additional 10-months pledging 7,000 more food baskets, which is expected to enable approximately 2.4 million meals. This is in addition to the 7,000 food baskets already delivered over the last 10- months at the height of the COVID-19 pandemic for the vulnerable families in the Vale do Jequitinhonha region.
“Homecoming Employment Program (Volta Ao Lar)”: Over 300 people are currently employed on site, with approximately 72% coming from the Vale do Jequitinhonha region, setting the stage for significant social economic impact in a destitute region. The Company is reuniting families through its “Homecoming Program” (Volta Ao Lar)”, bringing back home qualified workers that had migrated out of the region, due to lack of employment opportunities.
“Education Program for Mining Technicians”: The Company’s Chief Sustainability Officer organized an educational partnership between the UFVJM (Campus Janauba) and the Federal Institute of Education of Araçuaí, creating the first program to prepare mining technicians in the region.
“OMICRON COVID-19 Prevention Program”: The Company has also expanded its “OMICRON COVID-19 Prevention Program” in the Vale do Jequitinhonha region delivering an additional 6,000 liters of sodium hypochlorite and 3,225 liters of gel alcohol, together with the Company’s COVID-19 prevention education booklet. In aggregate, the program provided necessary supplies for sixteen institutions administering over 20,000 medical appointments per month (over 240,000 appointments per year). Additionally, the Company also provided sodium hypochlorite for disinfection of six public places essential to the local community, such as the municipal food market.
“Re-Opening of Childcare Centers Initiative”: The Company sponsored an initiative to support the re-opening of two childcare centers serving 560 children in the municipalities where the Compnay operates. The Company launched a program for the sponsorship of two-day childcare facilities, one in each of the municipalities where the Project is located. The objective of the program is to assist 560 children in need over a year. The campaign totaled 217 liters of liquid soap, 543 liters of shampoo, 490 toothbrushes, 29,700 diapers and 62,600 napkins.
“Disaster Relief During Floods”: The Company has provided first response disaster relief supplying food and water for 400 victims who lost their homes as a result of the floods in the Vale do Jequitinhonha region during the unusually rainy season throughout New Year holidays and the month of January. Since the fourth quarter of 2021, the Company distributed over 11,000 liters of potable water to serve the distressed towns of Araçuaí and Itinga due to the unusual floods in the region. This action helped 5,000 families (more than 20,000 people) who did not have, or had only partial, access to potable water.

16

2021 ANNUAL INFORMATION FORM


Graphic

Also, following the principles of UN-SDG #17 partnership for the goals, the Company inaugurated the independent agency for private investment promotion and economic diversification of the region (the Sustainability Council) in partnership with the towns of Itinga and Araçuaí, on the week of the 150th anniversary of the town of Araçuaí.

The Sustainability Council aims to transform the territory with organized activities to stimulate development, contributing to the diversification of the business environment through the attraction of investments to the two municipalities.

The Company has successfully obtained institutional support for this initiative from the State of Minas Gerais and its various development bodies, including  the secretary of special development (SEDE), the State investment agency (formerly INDI, renamed Invest Minas). Since May 2021, the Company has been working with TSX Advisors, a specialist consulting firm, to lead the project to structure and implement the Sustainability Council. The consultant has a successful track record of executing similar projects for Brazils largest mining companies.

Methodological challenges to address socio-economic impact matters in a way that converges with the Companys strategy and core business will be addressed by applying the methodology proposed by the World Bank for similar Sustainability Council globally, with the Company acting as broader development catalyst (not as principal). This workstream was approached as follows

Definition of the framework for the Sustainability Council, including: (i) mapping and approaching stakeholders; (ii) evaluation of the region's maturity and economic engagement indices; (iii) definition of the Agency Model for the region; (iv) consolidation of governance and management models; (v) modulation of the economic sustainability plan; and (vi) defining priority sustainability areas to receive investments.
oWorkstreams (i), (ii), and (iii) have been completed and the remaining ones are expected by early 2022
oWorkstream (v) has been achieved with the participation of the towns of Aracuai and Itinga at COP26 in person in Glasgow. Each town appointed a technical external representative to join the Company in Glasgow and participate in the Investment COP (sponsored by the World Climate Summit), amongst other various ESG educational seminars around the COP26
Considering that both towns will have representatives on the Sustainability Councils board of directors, their participation was considered critical in order to be exposed to the latest developments in climate change as they will participate in the agency's planning on a sustainable basis
oWorkstream (vi) is intended to be completed by first half of 2022, once all members of the Sustainability Council has been appointed.

In line with UN-SDG #3 (Good Health and Well Being), the Company continues to follow strict COVID-19 protocols, as previously disclosed, and no new cases were reported at the Project site during the fourth quarter of 2021.

In addition to the initiatives described above, the Company has ongoing comprehensive environmental and social programs in process, consistent with its leadership role in ESG in the lithium mining sector and its commitment to sustainable mining.

The mitigating social and environmental programs already initiated or to commence during the construction phase aim to establish actions to proactively mitigate, prevent, control and compensate for the environmental impacts that could be caused by mining and processing activities to be carried out by the Company once it commences production. These programs and actions, which are described below, are also based on the UN-SDGs:

·

Programs and actions commenced in the fourth quarter of 2021: the Company expects to complete a program for the implementation and maintenance of rain drainage systems and containment of erosion processes; noise and vibration levels control and monitoring program; and a monitoring program for domestic and industrial effluents.

·

Programs and actions initiated in the second half of 2021: air emissions control and air quality monitoring programs and surface water quality monitoring program.

·

Programs and actions initiated in the first half of 2021: program to rescue and drive away the local fauna from industrial site; program to rescue threatened and endemic flora; and a fauna monitoring program.

17

2021 ANNUAL INFORMATION FORM


Graphic

·

Programs and Actions initiated in 2020: solid waste management program; waste reuse plan; environmental education program; program for the prioritization and professional training of local suppliers; accident prevention and public health program; social communication program; maintenance and conservation program for permanent preservation areas and legal reserves; environmental management and supervision plan; monitoring program for vegetation planted; program for visual monitoring of environmental impacts and mitigating measures; and specific conservation and monitoring programs for endangered species.

On November 8, 2019, Ana Cabral-Gardner addressed the World Climate Summit during the UN Climate Change Conference COP-25 in Madrid and presented a case study for the Company as an ESG green mining company and the role played by its investors in providing the capital and leadership to drive the implementation of environmental and social best practices in developing the Project.

Corporate

On December 23, 2021, the Company announced the closing of a non-brokered private placement (the December 2021 Offering) of 11,634,137 Common Shares at a price of Cdn$11.75 per Common Share for aggregate gross proceeds of Cdn$136.7 million (approximately US$106 million). Given the strong investor interest, the December 2021 Offering was twice-upsized, first by approximately 42% and then subsequently by an incremental 60%. As part of the December 2021 Offering, funds and accounts managed by BlackRock purchased 4,372,766 Common Shares for an aggregate subscription price of approximately Cdn$51.4 million. Additionally, BlackRock purchased 1,093,191 Common Shares at the same offering price on a secondary basis from the largest shareholder of the Company, A10 Fund, for an aggregate purchase price to the A10 Fund of approximately Cdn$12.8 million.

On December 2, 2021, the Company filed a short form base shelf prospectus (the Canadian Base Shelf) to qualify the distribution, from time to time over a 25-month period, of up to US$250 million in Common Shares, debt securities, subscription receipts, or warrants, in amounts, at prices, and on terms to be determined based on market conditions at the time of sale and set forth in an accompanying prospectus supplement. The Canadian Base Shelf was filed in each province and territory of Canada, other than the Province of Quebec. The Company also filed a corresponding shelf registration statement on Form F-10 (the U.S. Base Shelf) with the U.S. Securities and Exchange Commission (the SEC) under the Multijurisdictional Disclosure System.

On October 5, 2021, the Company announced the signing of a binding term sheet (the LGES Term Sheet) for offtake arrangements on a take or pay basis (the LGES Offtake) for the sale of Battery Grade Green and Sustainable Lithium to LG Energy Solution, Ltd (LGES), one of the worlds largest manufacturers of advanced lithium-ion batteries for electric vehicles. The six-year LGES Offtake for Battery Grade Green and Sustainable Lithium is to scale from 60,000 tonnes per year in 2023 to 100,000 tonnes per year from 2024 to 2027 subject to the Company and LGES executing mutually acceptable definitive documentation to implement the LGES Offtake. The Company and LGES also agreed to negotiate each year, an additional optional supply of Battery Grade Green and Sustainable Lithium, not otherwise committed in other Sigma Lithium offtake arrangements. The purchase price for the Battery Grade Green and Sustainable Lithium under the LGES Offtake will be linked to market prices for the high purity lithium hydroxide during the term.

On September 13, 2021, the Company completed its dual-listing process and the Common Shares began trading in the U.S. on the Nasdaq. The Company is pleased to report that its corporate governance policies and the make up of the Board are compliant with required Nasdaq and SEC governance standards, including Nasdaqs diversity requirement for a companys board to have at least one female director and at least one additional diverse director.

On September 8, 2021, the Company announced the appointment of Ana Cabral-Gardner as Co-CEO, joining Calvyn Gardner, who was previously CEO and also became Co-CEO as well as the new management appointment of Felipe Peres as Chief Financial Officer. The Company also announced the constitution of an ESG Board Committee resulting from the program intended to achieve net zero emissions by 2024 and the issuance of performance-based RSUs to the Co-CEOs.

On June 29, 2021, the Company held the annual and special meeting of the Companys shareholders. At such meeting, the Companys shareholders approved: (i) the election of Gary Litwack (independent), Frederico Marques (independent), Calvyn Gardner, Marcelo Paiva, and Ana Cabral-Gardner as the directors of the Company; (ii) the re-appointment of KPMG LLP as the auditors of the Company for the financial year ended December 31, 2021; (iii) a special resolution authorizing and approving the amendment to the Companys

18

2021 ANNUAL INFORMATION FORM


Graphic

articles to effect the change of the Companys name from Sigma Lithium Resources Corporation to Sigma Lithium Corporation; (iv) an ordinary resolution approving the repeal and replacement of the existing by-laws of the Company with a new By-Law No. 1; and (v) a special resolution approving the amendment to the articles of the Company to effect a consolidation of the Common Shares on the basis of one (1) post-consolidation common share for up to ten (10) pre-consolidation common shares, as determined by the Board at its sole discretion (no further action has been taken to date related to such share consolidation).

On February 12, 2021, the Company announced the closing of a non-brokered private placement (the February 2021 Offering) of 9,545,455 Common Shares at a price of Cdn$4.40 per Common Share for aggregate gross proceeds of Cdn$42.0 million. The size of the February 2021 Offering reflected a significant upsizing due to strong institutional investor demand.

On December 7, 2020, the Company announced that it received a binding commitment for a Cdn$18,750,000 (R$75,000,000) credit line (Development Credit Line) from Banco de Desenvolvimento de Minas Gerais. The closing of the Development Credit Line is subject to the negotiation of definitive documentation and other customary closing conditions, followed by final credit approval for draw-downs.

On September 25, 2020, the Company announced a management appointment and updates to the Board. The Company appointed Maria Jose Salum as its Chief Sustainability Officer. The Company also announced the constitution of a Technical Board Committee with Wes Roberts and Vicente Lobo as the Co-Chairs. Ana Cabral-Gardner was appointed as Co-Chairman of the Board, joining Calvyn Gardner, who was previously Chairman and also became Co-Chairman of the Board.

On August 13, 2020, the Company announced the closing of a non-brokered private placement (the 2020 Offering) of 8,250,200 Common Shares at a price of Cdn$2.15 per Common Share for aggregate gross proceeds of US$13.3 million (approximately Cdn$17.8 million). The size of the 2020 Offering reflected an upsizing by one-third from the original intended amount announced on July 27, 2020, due to strong institutional investor demand.

On June 29, 2020, the Company announced the signing of a term sheet for a US$45 million senior secured project finance facility (the Bank Project Finance Facility) to be led by Societe Generale. The consummation of the Bank Project Finance Facility remains subject to completion of due diligence, credit approval, the negotiation of definitive documentation and other customary closing conditions.

A10 Group has supported the Company´s liquidity needs without additional equity incentives on two occasions, both in connection with then challenging capital markets conditions:

1)

On November 29, 2019, in order to fund its working capital, the Company entered into an agreement with the A10 Group providing for a Cdn$6.6 million (US$5.0 million) revolving credit facility (the Unsecured Credit Facility Agreement), bearing interest at 11% per annum, calculated from the day funds were drawn. The Unsecured Credit Facility Agreement did not include any warrants or other incentives. It had a one-year term, which was the maturity for all funds drawn, and allowed funding for lender-approved expenses. Its term was extended twice by A10 Group, for both principal and accrued interest, without any penalties or additional charges until September 2021, when it was repaid in full.

2)

During March of 2018, A10 Group, provided several bridge loans to the Company in the aggregate amount of R$1,747,600 (US$595,932) with interest calculated pursuant to the CDI (Brazilian Interbank Rate) plus a 4% per year spread, accrued from the date of each disbursement. The bridge loans had due dates on April 30 and May 30, 2018 and were automatically renewable on a rolling basis. On July 18, 2018, the loans were repaid in full.

On April 5, 2019, the Company announced the execution of a binding heads of agreement (the Mitsui HOA) with Mitsui & Co. Ltd. (Mitsui). In accordance with the Mitsui HOA, Mitsui would prepay the Company the amount of US$30,000,000 for Battery Grade Green and Sustainable Lithium supply of up to 80,000 tonnes annually over six years, extendable for another five years at the option of Mitsui. The initial tranche payment of US$3,000,000 was received by the Company on April 4, 2019 and recorded as deferred revenue. The consummation of the transactions contemplated by the Mitsui HOA remain subject to the negotiation of definitive documentation (for either the prepayment arrangement of another mutually acceptable role for Mitsui, depending upon whether Sigma ultimately determines to accept the balance of the prepayment) and other customary conditions.

19

2021 ANNUAL INFORMATION FORM


Graphic

On January 9, 2019, the Company announced an increase in mineral resource at the Project, and certain other updates to the Board and management of the Company.

On April 30, 2018, the Sigma Merger Transaction was completed. In connection with the Sigma Merger Transaction, Sigma Holdings completed a $20,040,000 private placement offering of subscription receipts, which were exchanged for pre-consolidation Common Shares upon the implementation of the Sigma Merger Transaction.

DESCRIPTION OF THE BUSINESS

Overview

Sigma is a Canadian mineral processing and development company, focused on advancing, with an environmental sustainability directed strategy, one of the largest hardrock lithium projects in the Americas its wholly-owned Grota do Cirilo Project, located in Minas Gerais in Brazil with the goal of participating in the rapidly expanding lithium-ion battery supply chain for EVs.

In order to secure a leading position supplying environmentally sustainable lithium for the next generation of EV supply chains, the Company has adhered consistently to the highest principles and standards of ESG practices, which were established as part of its core purpose at inception in 2012. As a result, the Company has undertaken an ESG-centric management strategy, whereby its environmental and social sustainability purposes determine its strategic steps.

Sigma´s Common Shares are listed and trade on the TSXV and Nasdaq under the symbol SGML.

Lithium Properties

The Project comprises four properties owned by Sigma Brazil: Grota do Cirilo (the area of the Project where the First Mine and Second Mine are located), and the Sao Jose, Genipapo and Santa Clara properties. The Project consists of 27 mineral rights (which include mining concessions, applications for mining concessions, exploration authorizations and applications for mineral exploration authorizations) spread over 191 km2. Within the Project area there are nine past producing lithium mines and 11 first-priority development targets.

The Project is located in the northeastern part of the state of Minas Gerais, in the municipalities of Araçuaí́ and Itinga, approximately 25 km east of the town of Araçuaí́ and 600 km northeast of Belo Horizonte, the state capital. The Project is approximately 500km from the Port of Ilheus, from where samples have been shipped for product certification and testing and from where future produced concentrates are planned to be shipped.

Current Status of the Project

The Project will be vertically integrated, as the Company´s own mining operations will supply mineralized spodumene material with exceptional mineralogy to its lithium production and processing plant (the Production Plant). The Production Plant is designed to be environmentally friendly, fully automated and digitally controlled. It will separate, purify and concentrate the spodumene in an environmentally friendly process to produce Battery Grade Green and Sustainable Lithium, engineered to the specifications of the Companys customers in the rapidly expanding lithium-ion battery supply chain for EVs.

The Production Plant is planned to have two separate production lines with similar processing flowsheets, which are projected to share certain elements of a common plant infrastructure. The first phase of production for the Project (Production Phase 1) is the subject of the feasibility study analysis included in the Updated Feasibility Study Report. It will initially utilize feedstock spodumene from the Projects Xuxa deposit (the First Mine), mining an average of 1.50 million tonnes per year during approximately 9.2 years of projected mine life. Its detailed design has been completed and the capital expenditures have been confirmed with quotes by each respective supplier to reach FEL-3 stage of precision. Based on the Updated Feasibility Study Report, the Company plans to produce 220,000 tonnes per year of Battery Grade Green and Sustainable Lithium, equivalent to 33,000 tonnes per year of lithium carbonate equivalent (LCE), in Production Phase 1 and expects to be amongst the worlds lowest cost producers.

20

2021 ANNUAL INFORMATION FORM


Graphic

The next production phase of the Project (Production Phase 2) has been the subject of the preliminary economic assessment (the PEA) included in the Updated Feasibility Study Report, and could potentially increase production utilizing feedstock from the Projects Barreiro deposit (the Second Mine). GE21, based on the Mineral Resource, prepared the PEA for the Second Mine. The Company completed the PEA with the objective of potentially responding to a significant increase in demand from its customers and solidifying its unique market position as a future supplier of Battery Grade Green and Sustainable Lithium. As reflected in the Updated Feasibility Study Report, the PEA projects significant economies of scale for Production Phase 2 (if warranted, following completion of the ongoing pre-feasibility study and a feasibility study), resulting from the low capital expenditure (CAPEX) of adding a second environmentally-friendly lithium processing line and vertically integrating it to the Project, mining an average of 1.68 million tonnes (Mt) per year during approximately 12.7 years of projected mine life.

The PEA is preliminary in nature and includes inferred mineral resources that are too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized. It is noted that the Company has not yet made a production decision in respect of the Second Mine. The Company expects that it will assess the results of a pre-feasibility study and a feasibility study before making a production decision in respect of the Second Mine. All statements regarding mine development or production in respect of the Second Mine in this AIF are expressly qualified by this statement.

The Company also commenced a further pre-feasibility study for Production Phase 2 contemplating the addition of a second processing line with similar capacity of 220,000 tonnes per year of Battery Grade Green and Sustainable Lithium from Production Phase 1 (once onstream in 2023), therefore potentially doubling the Project total capacity to 440,000 tonnes per year (66,000 tonnes per year of LCE) of Battery Grade Green and Sustainable Lithium. Production Phase 2 is expected to benefit from economies of scale by utilizing most of the Production Plant infrastructure established for Production Phase 1.

This approach is the result of a thorough review of the Company´s strategic priorities in light of the significant change in lithium market conditions and aims to significantly increase both the scale of the Project and its commercial and market importance on three fronts: future production, scale of mineral resources and of mineral reserves, all the while maintaining Battery Grade Green and Sustainable Lithium products and the Companys strategic leadership in environmental, social and governance (ESG) in the lithium supply chain.

The Company is accelerating its site exploration activities for the Project with the goal of increasing the Project mine life or potentially increasing production by either expanding production levels in Production Phase 2, if warranted after completing the ongoing pre-feasibility study (and feasibility study) or studying the potential of a third production expansion phase (Production Phase 3).

The Production Plant has a lithium processing design that includes DMS technology which does not utilize hazardous chemicals in the separation and purification of the lithium. The Company will apply a customized algorithm developed to contemplate the specificities of the mineralogy in each of the Companys mines to digitally control the dense media levels in the Production Plant.

In addition, the Production Plant will be 100% powered by clean energy and it will use water efficiently, while preserving land ecosystems. As a result of state-of-the-art recirculation and tailings management circuits:

·

the tailings will be dry stacked (and therefore will not create an earth-fill embankment tailings dam). Because the DMS technology of the Production Plant does not utilize hazardous chemicals, the dry-stacked tailings materials could also be entirely recyclable as feed for ancillary industries, such as ceramics; and

·

the water utilized in the production process is 100% recirculated to the Production Plant. Approximately 10% of the water is either lost or evaporates, with 90% of water consumed in the production process reutilized back into the Production Plant, achieving a high level of water efficiency.

Since the fourth quarter of 2018, Sigma Brazil has been producing low carbon high purity lithium concentrate at an on-site Demonstration Plant and has shipped samples to potential customers for product certification and testing. This demonstration production has been an important part of the successful commercial strategy of the Company for its Battery Grade Green and Sustainable Lithium.

21

2021 ANNUAL INFORMATION FORM


Graphic

The Company expects to submit a net zero execution plan to achieve its emission reduction targets after its first year of full operations, expected to be in 2024, partly as a result of its strategic decision to decrease emissions through the introduction of biofuels for haulage trucks and other heavy equipment of the mining fleet starting in the second year of production. The Company also plans to pursue generation of carbon credits through in-setting strategies such as preserving water streams and developing the agroforestry systems within its regional ecosystem. As part of that strategy, the Company is studying future partnerships with generators of renewable power for self-generation of the electricity required to power the Production Plant.

In order to secure a leading position supplying Battery Grade Green and Sustainable Lithium for the next generation of EV supply chains, the Company has adhered consistently to the highest principles and standards of ESG practices, which were established as part of its core purpose at inception in 2012. As a result, the Company has undertaken an ESG-centric management strategy, whereby its environmental and social sustainability purposes determine its strategic steps.

The Company commissioned an assessment of its net carbon footprint, conducting an independent ISO 14000 compliant audit of its life cycle analysis together with an independent expert validation of its carbon credits generated by its internal preservation, reforestation, and compensation forestry programs as well as its renewables generation plans. The Company expects to complete this workstream during 2022.

Operations Overview

Highlights of Project Development and Operations

The Company is pleased to report significant advancement on construction of the Production Plant, establishing operational readiness, and supporting ongoing operations:

Completed earthworks necessary for construction of the foundations for the Production Plant on budget and on schedule.
Commissioning forecasted to begin at the end of 2022.

On December 6, 2021, the Company announced the commencement of construction on site to build the foundation and infrastructure installation for its greentech DMS Production Plant. The strategy adopted for the construction phase of the Production Plant was to divide the scope into the following workstreams, all currently in progress:

·

Sitewide bulk earthworks encompassing site leveling, protective drainage, preparation of access roads, paving, fencing and gating for all of the sites installations;

·

Civil works involving direct foundations for equipment, structures, and buildings;

·

Relocation of a 138kV transmission line that overlays the north pit of the Project;

·

Construction of a high voltage substation to provide the Project site with connection to the CEMIG (the relevant Brazilian power authority) grid.

·

Electromechanical assembly of raw water supply piping and installations and equipment builds including tanks assembled at this site and installation of electrical equipment and instrumentation; and

·

Commissioning activities and pre-operation to support the Production Plant operation start-up.

The earthworks for construction of the foundations for the Production Plant are complete. The construction team is currently focused on the construction of the First Mine protective drainage (channels and pipes) and construction of the bypass of the municipal road around the Project site. These two workstreams are expected to be concluded as planned on schedule and budget.

The ROM pad construction is expected to commence in April 2022, and it will be followed by the construction of the haul road linking the First Mine to the Production Plant and widening of the municipal access road.

22

2021 ANNUAL INFORMATION FORM


Graphic

There are currently a total of 73 heavy construction units on site, including: mobile concrete mixer trucks, hydraulic excavators, backhoe loaders, track and tire tractors, crawler tractors, road rollers, dump trucks, water trucks, pickup trucks and utility and ambulance vehicles.

Detailed engineering of the EPCM for the Production Plant (including civil works) has been led by Primero and has been progressing as indicated in the two tables below. The Company prioritized the engineering completion of the following aspects of the Production Plant: process design, mechanical, structural/foundations and concrete. This sequencing had two main objectives:

further refining the flowsheet of the DMS circuit; and
conducting trade-off analysis for critical equipment, such as the DMS ultrafines circuits, the environmental dry-stacking, and water recirculation circuits.

23

2021 ANNUAL INFORMATION FORM


Graphic

Detailed Engineering Progress Summary

Discipline

Progress

Concrete

36%

Process Design

71%

Mechanical

52%

Structural

34%

Electrical & Instruments

27%

Platework

20%

Piping

5%

Controls

2%

Detailed Engineering Progress Across Key Disciplines

Key Discipline

Detailed Progress Activities

Mechanical

(52% complete)

Progressed cast in vault chutes ready
Continued with general platework 2D drawings across all areas
Coarse Ore Bin platework 2D drawing progressed
Coarse Ore Bin Discharge Chute drawing progressed
Scalping screening 2D platework drawings progressed
Secondary and Tertiary Crusher 2D platework drawings progressed
Feedbox calculations
ROM Bin calculations
Line sizing and P&ID mark-ups
Wet plant area platework drawings (DMS Sizing Area, Primary DMS)

Process

(71% complete)

Continued Process Control and Process Control Tables
HAZOP Actions
Thickener test complete on a 25m diameter unit
Belt filter test work complete choosing a 25m2 unit
Dry plant (Area 200) P&IDs
Wet plant area P&IDs

Electrical / Instrumentation / Controls

(27% complete)

Remote IO panel
Crushing Switchroom Equipment & Cables List
DMS Switchroom Equipment & Cables List
DMS MCC 2 Schematics AFC

Civil / Structural

(36% complete)

ROM Wall concrete design
Secondary and Tertiary Crusher Vault drawings
Primary Crusher steelwork and vault 2D drawings
Scalping Screening concrete 2D drawings
Engineering continued for the dynamic analysis of the Secondary and Tertiary Crusher steelwork
Continue feed bin preparation area structural engineering and foundation design confirmation
Continued stacker concrete design
Started Primary DMS footing design

24

2021 ANNUAL INFORMATION FORM


Graphic

Production Plant EPCM

A detailed outline of the engineering and design work breakdown between Promon and Primero during the project execution phase is outlined below.

The work breakdown outlining the division of engineering and design between Promon and Primero during the project execution stage is to be as follows:

DIVISION OF RESPONSIBILITIES

WBS* ITEM

AREA

DESCRIPTION

DETAIL ENGINEERING

100

SITE WIDE

Bulk Earthworks

PROMON

Civil/Concrete

PRIMERO

Structural Steel

PRIMERO

Mechanical Equipment

PRIMERO

200

CRUSHING

Piping

PRIMERO

Platework

PRIMERO

Elect, Instr & Control

PRIMERO

Communications

PROMON

Civil/Concrete

PRIMERO

Structural Steel

PRIMERO

Mechanical Equipment

PRIMERO

300

WET PLANT

Piping

PRIMERO

Platework

PRIMERO

Elect, Instr & Control

PRIMERO

Communications

PROMON

600

INFRASTRUCTURE

Power/Water/Buildings/Etc.

PROMON

700

MINING

Mining General

MINING CONTRACTOR

Mining Facilities

MINING CONTRACTOR

*Work Breakdown Structure

Detailed engineering is completed in collaboration of Promon and Primero. The detailed engineering is progressing according to priority and both companies started issuing construction drawings according to the schedule baseline.

Procurement services considered under the EPCM contractors scope encompass the phases of supplier list definition (together with the Company): request for quotation, tabulation of commercial proposals, commercial negotiations and issuance of purchase recommendation, kick-off meeting with the chosen supplier, expediting of supplier documentation during the project period and management of the company contracted by the Company expediting and inspecting the supplies and receiving on the field, as detailed in the activities below.

The following items describe the activities to be developed by the Company, in conjunction with Promon's construction and safety management team, throughout the execution of the construction:

·

manage the execution and certify the quality of the execution of the project;

·

analyze, critique and propose containment, prevention and correction measures, continuously and proactively, for the management of the entire implementation of the project (covering all aspects of health & safety, environment, quality, schedule, costs and scope);

·

manage the expediting of supply processes, to be executed by a specialized company to be hired by the Company;

·

manage the quality of project implementation;

25

2021 ANNUAL INFORMATION FORM


Graphic

·

coordination of commissioning activities, together with assembly contractors and equipment and systems suppliers, testing and delivery of the project; and

·

manage, supervise and enforce labor, social security and tax standards and the Companys and contractors specific corporate standards including: occupational safety and health health & safety, environmental, technical, and other standards.

Commissioning and Startup

Primeros scope includes the projects future commissioning and startup management, with the support of the Company's operational team, equipment suppliers and assembler, which will include the following activities:

·

preparation of commissioning and testing procedures of the implemented facilities and systems;

·

monitoring of commissioning tests and analysis of the respective issued reports;

·

identification, registration and communication of non-conformities related to commissioning and tests procedures;

·

monitoring and updating the backlog;

·

control of commissioning test reports issuance;

·

expediting, together with the contractors, the sending of the data-books, available for the pre-operational phase; and

·

coordination of interfaces between contractors.

Promon will assist in the commissioning of the Production Plant.

Capex Estimation (IPA Front End Loading FEL-3)

Promon has concluded a comprehensive CAPEX estimation at FEL-3 level of confidence for the Production Plant (with FEED documentation), including overall planning of the project, 3D models, the bulk site earthworks and site layouts. As part of this process, Promon developed the following items: (i) ROM pad, including retaining wall structures; (ii) settlement ponds; (iii) site wide bulk earthworks, including the following areas: greentech process circuits and infrastructure and water intake; and (iv) general site drainage.

Mining

The responsibility for the development of detailed engineering of mining related infrastructure will be divided between the mining engineering subconsultant and mining contractor, who will also be responsible for haul roads design.

Promon is to complement this scope, developing the engineering and design of: (i) mining general - access roads; (ii) mining infrastructure and services - fire hydrants; and (iii) fuels storage and distribution.

Pre-Construction Outlook for the First Mine (Production Phase 1)

The First Mine will supply 100% of the feedstock for the Production Plant during Production Phase 1, creating a fully integrated and low-cost operation. The Company and GE21 have completed a final ultimate pit mine design for the First Mine to supply the Production Plant for approximately nine years, potentially integrating with an eventual Second Mine (should a feasibility study so warrant) as the feedstock for the production of Battery Grade Green and Sustainable Lithium.

The Company has successfully completed several critical workstreams involved in the pre-construction of the First Mine within the scheduled and budgeted parameters. This includes all activities required for the geotechnical validation at detailed engineering level, as well as critical hydrogeological analysis and validation (including the installation of 12 piezometers for ongoing monitoring).

26

2021 ANNUAL INFORMATION FORM


Graphic

The Company has finalized the mining plan with two pit layouts (North and South Xuxa pits) including preparation of detailed mine production sequencing.

These validations at detailed engineering confidence levels were initiated as a result of the Companys ESG-centered strategy. A key element of the environmental strategy for Production Phase 1, as detailed in the Updated Feasibility Study Report, was the decision to open the First Mine as two separate pits to preserve the Piauí rivers seasonal stream and its surrounding ecosystems (collectively, the Piaui). This decision was a result of the Piaui´s pivotal role in providing the only source of freshwater for the surrounding communities for four to five months of the year during the rainy season (the Project is located within a semi-arid region with extended dry season).

The following workstreams of the pre-construction for the First Mine have been completed:

·

Completed 100% of geotechnical workstreams and refined North and South pit designs and pit wall slopes of the First Mine. Completed 100% of geotechnical modeling and analysis. All planned additional geotechnical holes were successfully drilled with core orientations targeting all wall orientations (i.e. hanging wall, end walls, and footwall).

·

The Company, GE21 and MDGEO completed 100% of hydrogeological workstreams. The Company decided to conduct a hydrogeology detailed assessment and complete a model of groundwater pathways to increase confidence that, in the scenario of climate change substantially altering rainfall patterns in the region (increasing seasonal water flows at the Piaui), the Company would be equipped with information to determine the most suitable pit dewatering methodology. Piezometers were installed for ongoing analysis of data for subsequent geo-hydrogeological modelling during the first year.

·

The Company and GE21 have completed a final and ultimate mine design for the First Mine. It has the benefit of enhancing the life cycle analysis of the Project by substantially decreasing its carbon footprint by: (i) decreasing the vegetation suppression of trees in the construction of the pit to less than 50 hectares; and (ii) the segregation of mine waste piles and processed tailings with the goal of future recycling as feed for ancillary industries, promoting a circular economy.

The following pre-construction activities have been concluded for the First Mine:

·

Completed the strategic monthly mining sequencing plan for the first three years of the life of mine, then quarterly for year four and annually for the remaining years.

·

Completed the design of final pit (with final operating parameters: berm, ramp, ultimate wall slope angles).

·

Developed a comprehensive grade control program utilizing geostatistical methods to ensure feed grades are maintained within the expected range. The proposed grade control system will be designed to minimize schist waste rock dilution with the pegmatite ore recovery in pit.

·

Finalized the waste piles design.

·

Designed the ROM pad for Production Phase 1 together with Promon.

Ongoing discussions regarding mine operation costs (including capital and operational expenditures) with potential suppliers that have submitted proposals are ongoing and suppliers should be selected in the coming months.

Preliminary Economic Assessment, Pre-Feasibility and Feasibility Studies for Increased Scale in Production Phase 2

The Company continues to advance multiple Project workstreams in geology, geotechnical, metallurgical, environmental and regulatory permitting with the objective of preparing for Production Phase 2 after 2023. The Company completed the PEA for the Second Mine and Production Phase 2, filing the Updated Feasibility Study Report on November 22, 2021. The PEA contemplated utilizing the spodumene feed from the Second Mine with the objective of significantly increasing production.

The Company has engaged SGS, Primero and GE21 to build on the results of the PEA and conduct pre-feasibility and feasibility studies for Production Phase 2, adding to the Production Plant a second similar DMS processing line with capacity of 220,000 tonnes per year

27

2021 ANNUAL INFORMATION FORM


Graphic

(33,000 LCE) of Battery Grade Green and Sustainable Lithium . The results of the various workstreams are planned to be completed in stages. Following the PEA, the pre-feasibility study is to be completed in the second quarter of 2022.

The PEA demonstrated the significant cost benefit of vertically integrating a second production line and utilizing spodumene feed from the Second Mine, potentially mining an average of 1.68Mt per year during a 12.7 year mine life.

·

The Second Mine is believed to be one of the Projects largest deposits. It is a high-purity, high-grade lithium deposit, with estimated 19.58Mt of measured and indicated mineral resources at 1.43% Li2O and 1.76Mt of inferred mineral resources at 1.45% Li2O suitable for open pit mining.

·

Additional drilling continues, seeking to both increase the mineral resource and to strengthen the geological data for the mineral resource model.

GE21, based on the mineral resource, prepared the PEA for the Second Mine. The PEA is preliminary in nature and includes inferred mineral resources that are too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized. It is noted that the Company has not yet made a production decision in respect of the Second Mine. The Company expects that it will assess the results of a pre-feasibility study and a feasibility study before making a production decision in respect of the Second Mine. All statements regarding mine development or production in respect of the Second Mine in this AIF are expressly qualified by this statement.

The Company and Primero completed all the metallurgical and variability test work at SGS laboratories with the aim of customizing a flowsheet for the processing line of Production Phase 2 with the Second Mine.

·

Completed pilot scale DMS metallurgical testing, which achieved approximately 60% Li2O recovery producing a battery grade concentrate of 6.11% Li2O.

·

The processing and metallurgy tests achieved good lithium recoveries in an environmentally friendly DMS plant, with similar flowsheet (and capital costs) to the first production line, without requiring a more capital-intensive and less environmentally friendly flotation process.

·These DMS recoveries are a result of the Second Mine having a similar exceptional mineralization to the First Mine.

The Company completed all field work for the preparation of a Second Mine pre-feasibility study, including geotechnical drilling and hydrogeology test work. Following the completion of the additional drilling program, GE21 will complete the mining plan, geotechnical program and modelling of the Second Mine. The field work required for the hydrogeological section of the pre-feasibility study has been completed, as all groundwater level measurements have been completed.

The following further workstreams have been completed:

·

further drilling campaigns and review of the block model developed by SGS;

·

revision of the final pit based on the new block model;

·

review of mine sequencing based on the new pit;

·

fleet sizing review based on new sequencing;

·

review of sterile pile in a location closer to the pit, reducing the average transport distance and costs; and

·

mine operational expenditures review based on sequencing, flee and wase pile.

28

2021 ANNUAL INFORMATION FORM


Graphic

Environmental Impact Study for Production Phase 2

The Company conducted detailed environmental impact studies for the fauna and the flora in the area of the Second Mine where the pit and waste piles will be located. These studies started in the dry season of the second quarter of 2020 and continued throughout the wet season during the third and fourth quarters of 2020. The environmental impact studies as well as a comprehensive environmental and social impact assessment report (EIA/RIMA) are ongoing by the Company.

The design proposed by the Company in the EIA/RIMA for the area directly impacted by the Project (the Project Impacted Area) has followed the Company´s ESG-centric approach to minimize distances by combining the minimization of greenhouse gas emissions of diesel in mining trucks with a minimization of semi-arid bush and vegetation suppression. Therefore, the Company contemplated the location of its processing tailings dry stacking piles in the vicinity of the Production Plant. As a result, the life cycle analysis of the Company is substantially enhanced, decreasing environmental and carbon footprints.

Once the EIA/RIMA is approved by regulators, a permit for the construction and installation of the Second Mine (LP/LI) as well as operation permits from environmental authorities will be required.

Exploration & Development of Other Deposits in the Project Area

The Company is accelerating its site exploration activities for the Project with the goal of potentially increasing the Project mine life at the expanded production levels of 440,000 tonnes of Battery Grade Green and Sustainable Lithium per year when including Production Phase 2 or potentially increasing production output through Production Phase 3 should EV penetration growth continue to accelerate, and lithium demand forecasts continue to demonstrate strength. The objective of the exploration program is to increase estimated mineral resources during the second quarter of 2022.

The Companys dedicated geological teams and SGS Canada are carrying out an exploration program to determine the ultimate extent of the property mineralization and more rapidly increase the scale of estimated mineral resources, while demonstrating the uniqueness of the high-purity quality of its hard rock lithium mineralization.

·

The Company has continued to conduct a campaign to diamond drill the remaining 10,000 meters (in a campaign targeting 20,000 meters) to further define current mineralized structures validated in the Updated Feasibility Study Report, increasing the scale of known deposits

·

In addition, it has focused on five other targets, previously identified by historical mining and surface trenching

This geology workstream did not impact the Production Phase 1 pre-construction workstreams as it is managed by a separate geological team.

·

Additionally, the Companys geological teams continued to evaluate the potential of known deposits that were not included in the mineral resource estimate in the Updated Feasibility Study Report. Two deposits with significant potential were targeted with diamond drilling campaigns

·

The Companys focus for the 2021/2022 drilling campaign is an area with pegmatite surface exposure that returned promising results in the 2018-2019 drilling program. This regional exploration program, of drilling designed to test the target object was very positive, totaling 21,116m in 129 positive holes. An additional 10,000m of drilling will be made, totaling 31,116m by the end of 2022.

·

During the campaign carried out on the Second Mine target to close the sections and confirm pegmatitic zones, 42 holes were drilled, totaling 6,750m and all holes were used for new mine sequencing studies and operating costs for the pre-feasibility study.

·

Concurrent with the detailing work, the technical team carried out work to survey new pegmatite bodies through trenches, totaling 350m of trenches and 180m of intercepted pegmatite, opening two new bodies for future reverse circulation drilling.

29

2021 ANNUAL INFORMATION FORM


Graphic

·

The NDC target (Nezinho do Chicão) target was the main objective of the drilling to date with approximately 1.5 km, so far 96 holes have been positive. The pegmatite remains open to the south, where it will be the result of future prospecting throughout 2022. The expectation is to start modeling and measuring the volume and average content of the body in the coming months.

·

For the coming months, the detailing of another target called Murial is also planned. A total of 6,550m and a total of 44 holes to the north of the known pegmatite are planned.

Additional operational and business updates in respect of the Company and the Project are provided in the Companys most recently filed MD&A.

Royalties

The Brazilian government levies a royalty on mineral production: Compensação Financeira pela Exploração de Recursos Minerais (CFEM). Lithium production is subject to a 2% CFEM royalty, payable on the gross income from sales. The Project is also subject to two third-party royalties:

(i)

an NSR royalty (NSR Royalty) of 1% over the gross revenues of the Company from sales of minerals extracted from the Project less all taxes and costs incurred in the process of extraction, production, processing, treatment, transportation and commercialization of the products sold. The NSR Royalty can be put by the owner and called by the Company for US$ 3.8 million, once the Company reaches commercial production of 40,000 tonnes of lithium concentrate

(ii)

another one that provides to the holder (currently LRC LP I) a royalty of 1% over the gross revenues of the Company from sales of minerals extracted from the Project, less taxes, returns and sale commissions (Net Revenue Royalty)

Life Cycle Analysis and Net Zero Strategy

The Company has engaged Minviro Ltd. for the preparation of an independent ISO 14000 compliant life cycle assessment (LCA). The Company has engaged BeZero Carbon Ltd for the assessment of the Company´s internal carbon offsetting projects (in-setting projects) and advice on a portfolio of carbon additional in-setting projects and initiatives which the company may undertake in order to deliver its plans to make a robust net zero declaration by 2024.

The objectives of both workstreams are to understand the greenhouse gas emissions associated with the positive activities of carbon sequestering undertaken by the Company, link the results to the overall carbon footprint of existing and planned operations, create an in-setting and offsetting plan for residual emissions and provide an evidence-based assessment for the Company´s net zero targets. The Company will take responsibility for all of its expected scope 1, 2, and 3 emissions, as is the expectation in todays international carbon accounting environment for maximizing the robustness and defensibility of the Companys strategy. Net zero targets will be undertaken in two phases: (i) net zero by 2023: incorporating scope 3 emissions from mine to port of shipment in Brazil; and (ii) deliver its plans to make a robust net zero declaration by 2024: incorporating scope 3 emissions at port of delivery.

The study and the audit are contemplating its production route of Battery Grade Green and Sustainable Lithium with spodumene mining and lithium purification and concentration production in Brazil. The final ISO 14000 audit report is ongoing and will include: (i) a cradle to grave life cycle inventory and impact assessment to generate impact data for climate change, water consumption, land use, waste management and certain impact categories selected by the Company; and (ii) a complete contribution analysis outlining the major inputs contributing to the impact categories.

The Company expects to publish results from the LCA in the second quarter of 2022, including its carbon in­setting and off-setting strategies. The Company plans to adapt to the most up to date norms in the industry, as this is an important pillar of the Companys plans to develop and maintain a net zero strategy, while the expectations and norms for offsetting and emissions reporting continue to evolve.

Environmental Licensing and Permitting

In August 2020, the Company filed at SUPPRI (the Priority Projects Superintendence of Minas Gerais) a complementary environmental impact study and environmental mitigation plan (the Supplementary EIA/RIMA) to the Company´s current LP/LI

30

2021 ANNUAL INFORMATION FORM


Graphic

Environmental License. The objective was to increase the scope area (Area Diretamente Afetada) of its current construction and installation license to include the south pit of the First Mine.

The Supplementary EIA/RIMA contemplates the simultaneous mining of both north and south pits of the First Mine, potentially also supplying the mineralized spodumene material for the first few years of Production Phase 2. Additionally, the Supplementary EIA/RIMA also includes a dry stacking tailings plan that separates rock waste and tailings piles in order to allow for the potential recycling of 100% of the tailings to ancillary industries, such as ceramics.

Subsequently, in May 2021, the Company filed at SUPPRI an update of the Supplementary EIA/RIMA. In November 2021, SUPPRI conducted the environmental site visit for the Supplementary EIA/RIMA. In January 2022, SUPPRI issued the final request for complementary information (Complementary Information Request) which was fully responded to by the Company (Complementary Information Reply) within the allotted period in March 2022.

The Complementary Information Reply included the submission to SUPPRI of the following environmental studies:

Estudo Sismográfico (seismic study)
Projeto de Drenagem de todo o sistema de lavra (drainage project for mining pit, when and if necessary)
Medidas Drenagem Cava (measurement of the potential quantity of water to be drained in the mining pit, when and if necessary)
Balanço Hídrico (water balance)
Estudo Hidrogeológico (hydrogeology study)
Programa de Educação Ambiental Cava Norte (program of environmental education North Pit)
Plano de Tráfego (updated traffic plan)
Mapa Desvio Estrada Municipal (map and plan for deviation of municipal road)
Relatório Campanhas de Monitoramento (monitoring campaigns report)
Relação de Comunidades (itemization and description of each community affected)
Programa de Monitoramento das Águas Superficiais (surface water monitoring program)
Programa de Monitoramento das Águas Subterrâneas (underground water monitoring program)
Informações Não Contempladas no PCA (additional information non-contemplated at PCA)
Caracterização Hidrológica do Córrego Taquaral (hydrogeology study of Taquaral seasonal stream)
Prospecção Espeleológica (report of any existing caves in the area)
Plano de Reaproveitamento do Rejeito (tailings recycling plan)
Drenagem Pilhas de Disposição de Rejeito/Estéril (drainage plan for tailings piles)
Implicações Inventário Vegetaçao (vegetation inventory)
Programa de Resgate de Espécies da Flora Ameaçadas e Endêmicas (program for rescue of eventual endangered species of vegetation)
Licença de Pesca Científica (license for scientific fishing)
Pontos de Monitoramento da Herpetofauna (monitoring points of reptile animals of the region)

The south pit of the First Mine is being designed to have the lowest possible environmental impact and greatest socioeconomic return. The simultaneous mining of the north pit and the south pit by the Company to feed the Production Plant will allow the municipality of Araçuaí (where the south pit is located) to receive royalties from mining (CFEM), previously restricted to the municipality of Itinga, where the north pit is located, spreading financial prosperity to both municipalities, meeting SDG # 16 (Peace, Justice and Strong Institutions).

The LP/LI Environmental License is required for construction and installation (which comprises pre-operation and commissioning of the production plant, including pre-stripping and all mining required for commissioning). An operating license (LO) is required for the commercial operations, when external sales of the products are conducted. The LO is can be granted once the construction and installation of the Project is completed as it follows a final inspection by SUPPRI of both First Mine and Commercial Plant. Therefore, as the Project is in construction the Company does not yet have an LO.

31

2021 ANNUAL INFORMATION FORM


Graphic

The Company obtained the required environmental licenses for both construction (LP) and installation and commissioning (LI) of the Production Plant from the environmental authority of the State of Minas Gerais (the LP/LI Environmental License), the Council of Environmental Policy (Conselho Estadual de Politica Ambiental or COPAM) in Brazil. COPAM issued a dual LP and LI Certificate in June 2019 for a period of six years expiring on May 31, 2025. The LP/LI Environmental License permits the Company to build the First Mine and Production Plant and to install the plant, conduct trial mining, and testing and commissioning of the DMS beneficiation process of mineralized spodumene material into Battery Grade Green and Sustainable Lithium building a reserve stockpile for future sale.

The Company's mining easement request (Servidão Mineral) was published in the Official Gazette of the Federal Government on July 29, 2020. This is an important step towards obtaining the operational license (Licença Operacional, LO) required after commissioning for the Project to enter full scale Production Phase 1. It contemplates the mining and processing activities of the First Mine.

The Company has a definitive water usage license for the construction of the Production Plant, which was granted by ANA (Agência Nacional de Águas), the Federal Governments water agency, in February 2019. The water usage license is valid for 10 years, which is expected to be sufficient for the life-of mine (LOM) requirements for mining and product processing from Production Phase 1, as currently planned by the Company. The water usage license received should also be sufficient to process lithium mineralized material at the planned rate of production of an expected 440,000 tonnes of Battery Grade Green and Sustainable Lithium as well as additional production phases contemplated, subject to confirmation by feasibility studies.

Surface Rights and Other Permitting

Certain surface rights in the Production Phase 1 area, the current primary focus of the Companys activity, are held by two companies owned by the co-CEOs of the Company, Arqueana Empreendimentos e Participações S.A. (Arqueana) and Miazga Participações S.A. (Miazga). The Company has entered into right-of-way agreements with these companies to support its exploration and development activities within the Grota do Cirilo property, as well as with third-party surface owners in the Project area.

The Company has a mining easement (Servidão Mineral) with a total of 413.3 hectares and aims to cover the areas of waste and tailings piles, Production Plant, all access roads (internal), electrical substation, installation of fueling station and support structures. The Servidão Mineral was published in the Official Gazette of the Federal Government. It contemplates the mining and processing activities of the First Mine (ANM Process No. 824.692/1971).

The Company also obtained a key approval for Production Phase 2 plan with the Agência Nacional de Mineração (the ANM) approving its economic feasibility study (Plano Econômico de Avaliação - PAE). This approval advanced the Production Phase 2 permitting process to the mining concession request stage (Requerimento de Concessão de Lavra).

The Company holds approved economic mining plans (Plano de Aproveitamento Econômico or PAE) over the Xuxa, Barreiro, Lavra do Meio, Murial, and Maxixe deposits within the Grota do Cirilo property. The Brazilian government levies a royalty on mineral production: Compensação Financeira pela Exploração de Recursos Minerais (CFEM). Lithium production is subject to a 2.0% CFEM royalty, payable on the gross income from sales. The Xuxa Project is also subject to two third-party royalties, one on the net income from sales and the other on a net smelter return (NSR), of 1% each.

Specialized Skills and Knowledge

All aspects of the Companys business require specialized skills and knowledge. Such skills and knowledge include the areas of geology, drilling, logistics planning and implementation of exploration programs as well as regulatory, finance and accounting. To date, the Company has been able to locate and retain such professionals from Australia, Brazil, Canada, Russia, South Africa and the UK, and believes it will be able to continue to do so. The Company relies upon its management, employees and various consultants for such expertise.

32

2021 ANNUAL INFORMATION FORM


Graphic

Mineral Price and Economic Cycles

The mining business is subject to mineral price cycles. The marketability of minerals and mineral concentrates is also affected by worldwide economic cycles. Lithium markets are affected by demands for lithium batteries and global economic conditions. Fluctuations in supply and demand in various regions throughout the world are common.

Economic Dependence

The Companys business is dependent on the exploration, development and operation of lithium properties and the EV market. The Company does not expect to be dependent on any sole contract to sell the major part of the Companys products or services or to purchase the major part of the Companys requirements for goods, services or raw materials.

Bankruptcy and Similar Procedures

There are no bankruptcies, receivership or similar proceedings against the Company, nor is the Company aware of any such pending or threatened proceedings. The Company has not commenced any bankruptcy, receivership or similar proceedings during the Companys history.

Reorganizations

There have been no corporate reorganizations of the Company within the three most recently completed financial years.

Foreign Operations

The Project exposes the Company to various degrees of political, economic and other risks and uncertainties. See Emerging Market Disclosure and Risk Factors below.

Employees

As at December 31, 2021, the Company had 126 employees and 127 part time and/or consultants working at various locations.

Environmental Protection

The current and future operations of the Company, including exploration and development activities, are subject to extensive laws and regulations governing environmental protection, employee health and safety, exploration, development, tenure, production, taxes, labour standards, occupational health, waste disposal, protection and remediation of environment, reclamation, mine safety, toxic substances and other matters. Compliance with such laws and regulations can increase the costs of, and potentially delay planning, designing, drilling and developing the Companys mineral properties, including the Project.

Social and Environmental Policies

The Company aims to minimize the impact of its operations on both local communities and the environment. The Company is committed to developing the Project in a responsible and sustainable manner. The Company takes its responsibilities seriously to protect the environment, to conduct business based on high ethical standards (including a commitment to not engaging in business with any persons or entities subject to multinational sanction) and to make a positive difference in the communities in which it operates.

SUMMARY OF UPDATED FEASIBILITY STUDY REPORT

Set out below is an extract from the Updated Feasibility Study Report dated November 22, 2021, with an effective date of June 2, 2021, prepared by by Homero Delboni Jr, B.E., M.Eng.Sc., Ph.D., Guilherme Gomides Ferreira (MEng) MAIG, Marc-Antoine Laporte, P. Geo, Stephane Normandin, P. Eng., Jacques Parent, P.Eng., Jarrett Quinn, P.Eng., Porifrio Cabaleiro Rodriguez, MEng., and Jacqueline Wang, P.Eng. (the FS Qualified Persons). Reference should be made to the full text of the Updated Feasibility Study Report, which is the current technical report on the Project, is available on the Companys website at www.sigmalithium.ca or at www.sedar.com and is incorporated by reference into this AIF, for the detailed disclosure in respect of the Project. All statements in the summary below are as of the effective date of the Updated Feasibility Study Report.

33

2021 ANNUAL INFORMATION FORM


Graphic

PROPERTY DESCRIPTION AND LOCATION

The Project is located in Northeastern Minas Gerais State, in the municipalities of Araçuaí and Itinga, approximately 25 km east of the town of Araçuaí and 450 km northeast of Belo Horizonte.

The Project comprises four properties owned by Sigma Brazil and is divided into the Northern Complex (the Grota do Cirilo, Genipapo and Santa Clara properties) and the Southern Complex (the São José property).

The Project consists of 27 mineral rights, which include mining concessions, applications for mining concessions and exploration permits, spread over 191 km2, which include nine past producing lithium mines and 11 first-priority exploration targets.  Granted mining concessions are in good standing with the Brazilian authorities.

The surface rights in the Grota do Cirilo area, the current primary focus of activity, are held by two companies, Arqueana Minérios e Metais (Arqueana) and Miazga Participações S.A. (Miazga).  Sigma Brazil has entered into two right-of-way agreements with these companies to support the Companys exploration and development activities within the Grota do Cirilo property, as well as third-party surface owners.

The Company has been granted a flow of 150 m3/h from the Jequitinhonha River for all months of the year for a period of 10 years, which is sufficient for life-of mine (LOM) requirements.

The Brazilian Government levies a Compensação Financeira pela Exploração de Recursos Minerais (CFEM) royalty on mineral production.  Lithium production is subject to a 2.0% CFEM royalty, payable on the gross income from sales. The Project is subject to two third-party net smelter return (NSR) royalties of 1% each.

To the extent known to the FS Qualified Persons, there are no other significant factors and risks that may affect access, title, or the right or ability to perform work on the Project that have not been discussed in the Updated Feasibility Study Report.

ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

The Project is easily accessible from regional paved road BR-367, which runs through the northern part of the Project.  Within the Project area, accessibility is provided by a network of maintained arterial and back country service roads. A municipal airport services the town of Araçuaí. The closest major domestic airport is located at Montes Claros, 327 km west of Araçuaí.

The Eastern Brazil region is characterized by a dry, semi-arid and hot climate. It is expected that future mining operations could be conducted year-round.  Exploration activities are year-round but can be interrupted by short-term rainfall events.

Mining operations have been previously conducted in the Project area. Existing infrastructure includes power supply and substation, an extensive office block equipped with internet and telephones, accommodation for 40 persons on site, dining hall and kitchen, workshop, on-site laboratory and sample storage building, warehouse and a large store, a fuel storage facility with pumping equipment, and a water pumping facility from the Jequitinhonha river with its reservoir.  The main 138 kV transmission line from the Irape hydro power station runs through the northern part of the Project area.  The town of Araçuaí can supply basic services. Other services must be sourced from Belo Horizonte or São Paulo.

The topography consists of gently rolling hills with less than 100 m difference in elevation. The Project area typically hosts thorn scrub and savannah.  Much of the area has been cleared for agriculture.  The primary source of water for this project is the Jequitinhonha River.

HISTORY

Exploration and mining activities prior to the Companys project interest were conducted by Companhia Estanìfera do Brazil (CEBRAS), Arqueana Minérios e Metais (Arqueana), Tanex Resources plc (Tanex; a subsidiary of Sons of Gwalia Ltd (Sons of Gwalia)), and RI-X Mineração S.A. (RI-X). CEBRAS produced a tin/tantalite concentrate from open pit mines from 1957 to the 1980s.  Arqueana operated small open pit mines from the 1980s to the 2000s, exploiting pegmatite and alluvial gravel material for tin and tantalite. Tanex Resources obtained a project interest from Arqueana, and undertook channel sampling, air-track, and reverse circulation (RC) drilling.  

34

2021 ANNUAL INFORMATION FORM


Graphic

The Project was subsequently returned to Arqueana.  In 2012, RI-X obtained a controlling interest in Arqueana, and formed a new subsidiary company to Arqueana called Araçuaí Mineração whose name was later changed to Sigma Brazil.  Sigma Brazil completed mapping, data compilation, a ground magnetic survey, channel sampling, and HQ core drilling.  A heavy mineral separation (HMS) pilot plant was built during 20142015.  Lithium-specific mining activities were conducted over at least five deposits in the Northern Complex, and four deposits in the Southern Complex.

In 2017, the Company purchased a DMS unit to produce a 6% Li2O spodumene concentrate. The Company has completed ground reconnaissance, satellite image interpretation, geological mapping, channel and chip sampling, trenching, core drilling, Mineral Resource and Mineral Reserve estimation, and a feasibility study.  The Company initially focused on a geological assessment of available field data to prioritize the 200 known pegmatites that occur on the various properties for future evaluation.  A ranking table that highlighted pegmatite volume, mineralogy and Li2O and Ta2O5 grade was established.  Within the more prospective areas, the Company concentrated its activities on detailed geological and mineralogical mapping of historically mined pegmatites, in particular, on the larger pegmatites.

GEOLOGICAL SETTING AND MINERALIZATION

The pegmatites in the Project area are classified as lithiumcesiumtantalum or LCT types. The Project area lies in the Eastern Brazilian Pegmatite Province that encompasses a very large region of about 150,000 km2, stretching from the state of Bahia to the state of Rio de Janeiro.

The pegmatite swarm is associated with the Neoproterozoic Araçuaí orogeny and has been divided into two main types: anatectic (directly formed from the partial melting of the country rock) or residual pegmatite (fluid rich silicate melts resulting from the fractional crystallization of a parent magma).  The pegmatites in the Project area are interpreted to be residual pegmatites and are further classified as LCT types.

Pegmatite bodies are typically hosted in a grey biotitequartz schist and form bodies that are generally concordant with the schist foliation but can also cross-cut foliation.  The dikes are sub-horizontal to shallow-dipping sheeted tabular bodies, typically ranging in thickness from a few metres up to 40 m or more, and display a discontinuous, thin, fine-grained chilled margin.  Typical pegmatite mineralogy consists of microcline, quartz, spodumene, albite and muscovite.  Spodumene typically comprises about 2830% of the dike, microcline and albite around 3035%, and white micas about 57%.  Locally, feldspar and spodumenes crystals can reach as much as 1020 cm in length.  Tantalite, columbite and cassiterite can occur in association with albite and quartz.  The primary lithium-bearing minerals are spodumene and petalite.  Spodumene can theoretically contain as much as 3.73% Li, equivalent to 8.03% Li2O, whereas petalite, can contain as much as 2.09% lithium, equivalent to 4.50% Li2O.

Features of the pegmatites where mineral resources have been estimated include:

First Mine:  foliation concordant, strikes northwestsoutheast, dips to the southeast at 40º to 45º, and is not zoned.  The strike length is 1,700 m, averages 1213 m in thickness and has been drill tested to    259 m in depth.  First Mine remains open to the west, east, and at depth

Second Mine:  foliation discordant, strikes northeastsouthwest, dips to the southeast at 30º to 35º, and is slightly zoned with a distinct spodumene zone as well as an albite zone.  The pegmatite is about 600 m long (strike), 3035 m wide, and 800 m along the dip direction.  Second Mine remains open to the northeast and at depth

Murial:  foliation discordant, strikes northsouth, and has a variable westerly dip, ranging from 25º to 75º.  The strike length is about 750 m, with a thickness of 1520 m, and the down-dip dimension is   200 m.  The pegmatite is zoned with a spodumene-rich intermediate zone and a central zone that contains both spodumene and petalite.  The southern section of the pegmatite has lower lithium tenors than the norther portion of the dike.  Murial remains open to the north, south, and at depth

Lavra do Meio:  foliation concordant, strikes northsouth, dips 75º–80º to the east.  The strike length is 300 m with an average thickness of 1215 m and a down-dip distance of 250 m.  The pegmatite is zoned and contains both spodumene and petalite and remains open at depth.

35

2021 ANNUAL INFORMATION FORM


Graphic

EXPLORATION

The Company began working on the Project in June 2012, focusing on a geological assessment of available field data to prioritize the 200 known pegmatites that occur on the various properties for future evaluation.  A ranking table that highlighted pegmatite volume, mineralogy and Li2O and Ta2O5 grade was established.

Within the more prospective areas, the Company concentrated its activities on detailed geological and mineralogical mapping of historically mined pegmatites, in particular, on the larger pegmatites, First Mine and Second Mine.  These dikes were channel sampled and subsequently assessed for their lithium, tantalum and cassiterite potential.  This work was followed by bulk sampling and drilling.  In the southern complex area, the Companys geologists have visited sites of historical workings, and undertaken reconnaissance mapping and sampling activities.  The Lavra Grande, Samambaia, Ananias, Lavra do Ramom and Lavra Antiga pegmatites were mined for spodumene and heavy minerals, and in some cases gem-quality crystals were targeted.  These pegmatites are considered to warrant additional work.

DRILLING

Drilling completed by the Company across the Project area consists of 255 core holes totalling 42,959.76 m. As at the date of the Updated Feasibility Study Report, this drilling has concentrated on the Grota do Cirilo pegmatites.  Drilling was at HQ core size (63.5 mm core diameter) in order to recover enough material for metallurgical testing.  Drill spacing is variable by pegmatite, but typically was at 50 m with wider spacing at the edges of the drill pattern.  Drill orientations were tailored as practicable to the strike and dip of the individual pegmatites.  The drill hole intercepts range in thickness from approximately 8595% of true width to near true width of the mineralization.

All core was photographed.  Drill hole collars were picked up in the field using a Real Time Kinematic (RTK) global positioning system (GPS) instrument with an average accuracy of 0.01 cm.  All drill holes were down-hole surveyed by the Companys personnel using the Reflex EZ-Track and Reflex Gyro instruments.  Calibrations of tools were completed in 2017 and 2018.

Sampling intervals were determined by the geologist, marked and tagged based on lithology and mineralization observations.  The typical sampling length was 1 m but varied according to lithological contacts between the mineralized pegmatite and the host rock.  In general, 1-2 m host rock samples were collected from each side that contacts the pegmatite.

The Company conducted HQ drilling programs in 2014, 2017, and 2018 on selected pegmatite targets.  The drill programs have used industry-standard protocols that include core logging, core photography, core recovery measurements, and collar and downhole survey measurements.  There are no drilling, sampling or recovery factors that could materially impact the accuracy and reliability of the results in any of the drill campaigns. Drill results from Grota do Cirilo property support the Mineral Resource estimates and the feasibility study.

SAMPLE PREPARATION, ANALYSES AND SECURITY

Sampling intervals were determined by the geologist, marked and tagged based on lithology and mineralization observations.  The typical sampling length was 1 m but varied according to lithological contacts between the mineralized pegmatite and the host rock.  In general, 1 m host rock samples were collected from each side that contacts the pegmatite.

All samples collected by Sigma Brazil during the course of the 20122018 exploration programs were sent to the SGS Geosol laboratory (SGS Geosol) located in the city of Belo Horizonte, Brazil.  A portion of the 20172018 sample pulps were prepared by ALS Brazil Ltda. in Vespasiano, Brazil (ALS Vespasiano) and shipped to ALS Canada Inc. Chemex Laboratory (ALS Chemex) in North Vancouver, BC, Canada for cross check validation.  A portion of the 2014 samples were resampled by the QP and sent for validation to the SGS Lakefield Laboratory (SGS Lakefield) in Lakefield Canada.  All laboratories, including ALS Chemex, ALS Vespasiano, SGS Lakefield and SGS Geosol are ISO/IEC 17025 accredited.  The SGS Geosol laboratory is ISO 14001 and 17025 accredited by the Standards Council.  All laboratories used for the technical report are independent from Sigma Brazil and the Company and provide services to Sigma Brazil pursuant to arms length service contracts.

36

2021 ANNUAL INFORMATION FORM


Graphic

Sample preparation conducted at SGS Geosol consisted of drying, crushing to 75% passing 3 mm using jaw crushers, and pulverizing to 95% passing 150 mesh (106 µm) using a ring and puck mill or a single component ring mill.  In 2017, SGS Geosol performed 55-element analysis using sodium peroxide fusion followed by both inductively coupled plasma optical emission spectrometry (ICP-OES) and inductively coupled plasma mass spectrometry (ICP-MS) finish (SGS code ICM90A).  This method uses 10 g of the pulp material and returns different detection limits for each element and includes a 10 ppm lower limit detection for Li and a 10,000 ppm upper limit detection for Li.  In 2018, SGS Geosol used a 31-element analytical package using sodium peroxide fusion followed by both Inductively Coupled Plasma Atomic Emission Spectrometry (ICP-AES) and ICP-MS finish (SGS code ICP90A).

Sample preparation at ALS Vespasiano comprised drying, crushing to 70% passing 2 mm using jaw crushers, and pulverizing to 85% passing 200 mesh (75 µm) using a ring and puck mill or a single component ring mill.  Lithium and boron were determined by sodium peroxide fusion followed by ICP-AES analysis (ALS Chemex method ME-ICP82b).

The 2017 witness samples collected on the 2014 drill core were analyzed at SGS Lakefield using sodium peroxide fusion followed by both ICP-OES and ICP-MS finish (SGS code ICM90A).

In addition to the laboratory quality assurance quality control (QA/QC) routinely implemented by SGS Geosol and ALS Chemex using pulp duplicate analysis, Sigma Brazil developed an internal QA/QC protocol for the First Mine drilling, which consisted of the insertion of analytical standard reference materials (standards), blanks and core duplicates on a systematic basis with the samples shipped to the analytical laboratories.  In 2017, the Company also sent pulps from selected mineralized intersections to ALS Chemex for reanalysis.  No pulp reanalysis was performed by the Company in 2013 and 2014.  A total of 664 pulp samples from the 2017 First Mine drilling program were sent to ALS Vespasiano for third-party verification.

Sigma Brazil inserted standards in sample batches during the 2014 and 20172018 sampling programs.  During the 2014 campaign, the standard used was made of locally sourced and prepared pegmatite and was not certified.  Sigma Brazil inserted an uncertified standard into the sample stream for every 25 samples for a total of five uncertified standards inserted.  The 20172018 campaign used seven certified standards from African Mineral Standards (AMIS), an international supplier of certified reference materials.  A total of 88 standards were inserted during the 2017 campaign and 315 were inserted during the 2018 campaign.  Results were considered acceptable and no material accuracy issues were noted.

During the 20172018 campaign Sigma Brazil included insertion of analytical blanks in the sample series as part of their internal QA/QC protocol.  The blank samples, which are made of fine silica powder provided by AMIS, are inserted an average of one for every 20 samples by the Sigma Brazil geologist and subsequently sent to SGS Geosol.  The same procedure was used by Sigma Brazil for the 2014 drilling campaign.  A total of 647 analytical blanks were analysed during the 2014 and 20172018 exploration programs.  Results were considered acceptable and no material contamination issues were noted.

Sigma Brazil inserted core duplicates every 20th sample in the sample series as part of their internal QA/QC protocol.  The sample duplicates correspond to a quarter HQ core from the sample left behind for reference, or a representative channel sample from the secondary channel cut parallel to the main channel.  Assay results were considered acceptable between the two sample sets.

Bulk densities of the lithologies were measured by SGS Geosol by pycnometer measurement.  Measurements were by lithology with special attention to the lithium bearing pegmatite.  Separate measurements were made for the First Mine and Second Mine.

A total of 188 measurements were made on Xuxa core from 20172018.  Of the 188 measurements, 24 were made on albite-altered pegmatite, 54 on schist, and 110 on lithium-bearing pegmatite.  For Second Mine, a total of 401 measurements were made on core from the 2018 drill program.  Of the 401 measurements, 82 were made on albite-altered pegmatite, 177 on schist, and 142 on lithium-bearing pegmatite.  For Murial, a total of 134 measurements were made by the same method on core from the 2018 drill program.  Of the 134 measurements, 32 were made on the albite-altered pegmatite, 58 on the schist and 44 on the lithium bearing pegmatite.  For Lavra do Meio, a total of 51 measurement were made by the same method on core from the 2018 drill program.  Of the 51 measurements, nine were made on the albite altered pegmatite, 22 on the schist and 20 on the lithium bearing pegmatite.

In 2017, SGS validated the exploration processes and core sampling procedures used by Sigma Brazil as part of an independent verification program.  The QP concluded that the drill core handling, logging and sampling protocols are at conventional industry

37

2021 ANNUAL INFORMATION FORM


Graphic

standard and conform to generally accept best practices.  The chain of custody was followed by Sigma Brazil employees and the sample security procedure showed no flaws.  The QP considers that the sample quality is good and that the samples are generally representative.

As additional QAQC, SMSA sent 664 samples from the 2017-2018 Grota do Cirillo drilling campaign to ALS Chemex for analysis using the protocol ME-ICP82b with sodium peroxide fusion.  Preparation was done by ALS Vespasiano and the samples were subsequently shipped to Vancouver.  The average Li concentration for the original was 6,411.4 ppm Li while the duplicate average was 6,475.9 ppm Li.  This indicates a slight bias of the ALS Chemex duplicates which is well within the accepted margin of error.

Overall, the QP is confident that the system is appropriate for the collection of data suitable for a Mineral Resource estimate and can support Mineral Reserve estimates and mine planning.

DATA VERIFICATION

Visits to the Project site were conducted by Marc-Antoine Laporte, P.Geo., M.Sc. from September 11 to September 15, 2017, from July 11 to July 17, 2018 and from September 18 to 23, 2018.  These visits enabled the QP to become familiar with the exploration methods used by Sigma Brazil, the field conditions, the position of the drill hole collars, the core storage and logging facilities and the different exploration targets.

The database for the Project was first transmitted to SGS by the Company on September 15, 2017 and was regularly updated by the Companys geologists.  The database contains data for:  collar locations; downhole surveys; lithologies and lithium assays.  Upon importation of the data into the modelling and mineral resources estimation software (Genesis©), SGS conducted a second phase of data validation where all the major discrepancies were removed from the database.  Finally, SGS conducted random checks on approximately 5% of the assay certificates, to validate the assay values entered in the database.

Witness samples were taken from previously sampled intervals and the half cores were cut to quarter cores.  A total of nine mineralized intervals were sampled to compare the average grade for the two different laboratories.  The average for the original samples is 1.61 % Li2O while the average for the control samples is 1.59 % Li2O.  The average grade difference is 0.02% which makes a relative difference of 1.28% between the original and the control samples.

Following the data verification process and QA/QC review, the QP is of the opinion that the sample preparation, analysis and QA/QC protocol used by Sigma Brazil for the Project follow generally accepted industry standards and that the Project data is of a sufficient quality.  However, more attention should be put into the blank material selection in the future in order improve the similarity between the batches.

MINERAL PROCESSING AND METALLURGICAL TESTING

Drill core samples from the First Mine were processed at the SGS Lakefield facility in October 2018, while samples from Barreiro were tested between November 2020 and May 2021.  Work conducted on the Xuxa samples included comminution, heavy liquid separation (HLS), REFLUX classifier, DMS and magnetic separation, while the Barreiro test work program included sample characterization, grindability testing and heavy liquid separation (HLS).

First Mine

Drill core samples were selected and combined into six variability (Var) samples for a test work program comprising of mineralogical analyses, grindability, HLS, REFLUX classifier, DMS, and magnetic separation testing.

Flowsheets for lithium beneficiation were developed in conjunction with the testwork.  The goal was to produce spodumene concentrate grading a minimum 6% Li2O and maximum 1% Fe2O3 while maximizing lithium recovery.

Four HLS tests, at four crush sizes (15.9 mm, 12.5 mm, 9.5 mm, and 6.3 mm) were carried out on each of the six variability samples to evaluate the recovery.  The 9.5 mm crush size was selected as the optimum crush size for DMS test work, as it results in the highest lithium recovery with minimal fines generation.

38

2021 ANNUAL INFORMATION FORM


Graphic

The DMS variability samples were each crushed to -9.5 mm and screened into four size fractions: coarse  (-9.5/+6.3 mm), fines (-6.3/+1.7 mm), ultrafines (-1.7/+0.5 mm) and hypofines (-0.5 mm).  The coarse, fines and ultrafines fractions of each variability sample were then processed separately for lithium beneficiation. The REFLUX classifier test work was carried out with a RC-100 unit for mica rejection from the fines and ultrafines fractions only.  This test work was conducted at FLSmidths Minerals Testing and Research Center in Utah, USA.

The coarse and fines REFLUX classifier underflow and ultrafines RC underflow of each variability sample were processed separately through DMS.  The DMS concentrate from each of these fractions underwent a magnetic separation step at 10,000 Gauss.

The DMS test work flowsheet for the coarse and fines fractions included two passes through the DMS; the first at a lower specific gravity (SG) cut-point (~2.65) to reject silicate gangue and the second at a higher specific gravity (SG) cut-point (~2.90) to generate spodumene concentrate.  The coarse DMS middlings were re-crushed to -3.3 mm and a two stage HLS test conducted.  The ultrafines DMS test work flowsheet included only a single pass through the DMS circuit at a high SG cut-point (~2.90) to generate spodumene concentrate.

The DMS test results demonstrated that DMS was able to produce spodumene concentrate with >6% Li2O in most of the tests, for an average recovery of 60.4%.

The Var 3 and Var 4 samples were determined to best represent the deposit.

Second Mine

Four variability and one composite sample were tested for Second Mine, with the goals of the program to provide preliminary process information on the metallurgical performance of mineralized material samples from the Second Mine.  The test work program was developed based on previous test work and flowsheet developed for the First Mine.  The aim of the test work program was to produce chemical grade spodumene concentrate (>6% Li2O) with low iron content (<1% Fe2O3), while maximizing lithium recovery.

Two sets of HLS tests were undertaken. The first set was conducted using the Composite to test optimal crush size (i.e., top size of 15.9 mm, 12.5 mm, 10.0 mm, and 6.3 mm).  HLS tests were then performed on each variability sample at the optimum crush size. The fine fraction (i.e., -0.5 mm) was screened out from each sub-sample and the oversize fraction was submitted for HLS testing. A crush size of -10 mm was determined to be optimal and variability HLS testing was undertaken at this crush size. Interpolated stage recoveries (6% Li2O concentrate) for the four variability samples ranged from 56.0% to 77.3%.

In all four variability samples, HLS tests produced >6% Li2O spodumene concentrate with low iron content (<1.0% Fe2O3).

MINERAL RESOURCE ESTIMATES

Mineral Resources for the Grota do Cirilo pegmatite were estimated using a computerised resource block model.  Three-dimensional wireframe solids of the mineralisation were defined using drill hole Li2O analytical data.

Data were composited to 1 m composite lengths, based on the northsouth width of the block size defined for the resource block model.  Compositing starts at the schist-pegmatite contact.  No capping was applied on the analytical composite data.  The First Mine models used a 6 m x 3 m x 5 m block size.  Murial and Lavra do Meio models used a 5 m x 3 m x 5 m block size and the Second Mine model used a 5 m x 5 m x 5 m block.  Average densities were applied to blocks, which varied by pegmatite, from 2.65 t/m3 at Lavra do Meio to 2.71 t/m3 at the Second Mine.

Variography was undertaken for First Mine, Second Mine and Lavra do Meio and the projection and Z-axis rescaling were done according to the mineralization orientation.

The grade interpolation for the First Mine, Second Mine and Lavra do Meio resource block models were completed using ordinary kriging (OK).  The Murial model was estimated using an inverse distance weighting to the second power (ID2) methodology.  The

39

2021 ANNUAL INFORMATION FORM


Graphic

interpolation process was conducted using three successive passes with more inclusive search conditions from the first pass to the next until most blocks were interpolated, as follows:

Pass 1:

First Mine:  search ellipsoid distance of 75 m (long axis) by 75 m (intermediate axis) and 25 m (short axis) with an orientation of 130° azimuth and -50° dip to the southeast; minimum of seven composites, a maximum of 15 composites and a minimum of three drill holes

Second Mine:  search ellipsoid distance of 55 m (long axis) by 55 m (intermediate axis) and 25 m (short axis) with an orientation of 155° azimuth and -35° dip to the southeast; a minimum of seven composites, a maximum of 15 composites and a minimum of three drill holes

Murial:  75 m (long axis) by 75 m (intermediate axis) and 35 m (short axis) with an orientation of 95° azimuth and -80° dip to the west; minimum of seven composites, a maximum of 15 composites and a minimum of three drill holes

Lavra do Meio:  50 m (long axis) by 50 m (intermediate axis) and 25 m (short axis) with an orientation of 280° azimuth and -75° dip to the east; minimum of five composites, a maximum of 15 composites and a minimum of three drill holes

Pass 2:

First Mine:  twice the search distance of the first pass; minimum of seven composites, a maximum of 15 composites and a minimum of three drill holes

Second Mine:  twice the search distance of the first pass; a minimum of seven composites, a maximum of 15 composites and a minimum of three drill holes

Murial:  twice the search distance of the first pass; minimum of seven composites, a maximum of 15 composites and a minimum of three drill holes

Lavra do Meio:  twice the search distance of the first pass; minimum of five composites, a maximum of 15 composites and a minimum of three drill holes

Pass 3:

First Mine:  300 m (long axis) by 300 m (intermediate axis) by 100 m (short axis) with a minimum of seven composites, a maximum of 25 composites and a minimum of three drill holes

Second Mine:  250 m (long axis) by 250 m (intermediate axis) by 100 m (short axis) with a minimum of seven composites, a maximum of 25 composites and no minimum number of drill holes

Murial:  200 m (long axis) by 200 m (intermediate axis) by 100 m (short axis) with a minimum of seven composites, a maximum of 20 composites and no minimum number of drill holes

Lavra do Meio:  125 m (long axis) by 125 m (intermediate axis) by 75 m (short axis) with a minimum of five composites, a maximum of 15 composites and no minimum composites required per drill hole.

The estimates and models were validated by statistically comparing block model grades to the assay and composite grades, and by comparing block values to the composite values located inside the interpolated blocks.  The estimates were considered reasonable.

Mineral Resources are classified into Measured, Indicated and Inferred categories.  The Mineral Resource classification is based on the density of analytical information, the grade variability and spatial continuity of mineralization.  The Mineral Resources were classified in two successive stages: automated classification, followed by manual editing of final classification results.  Classifications were based on the following:

40

2021 ANNUAL INFORMATION FORM


Graphic

Measured Mineral Resources

First Mine:  the search ellipsoid used was 50 m (strike) by 50 m (dip) by 25 m with a minimum of seven composites in at least three different drill holes

Second Mine, Murial, and Lavra do Meio:  the search ellipsoid was 55 m (strike) by 55 m (dip) by 35 m with a minimum of five composites in at least three different drill holes

Indicated Mineral Resources

In all deposits, the search ellipsoid was twice the size of the Measured category ellipsoid using the same composites selection criteria

Inferred Mineral Resources

In all deposits, all remaining blocks.

The conceptual economic parameters were used to assess reasonable prospects of eventual economic extraction.  A series of economic parameters were estimated to represent the production cost and economic prospectivity of an open pit mining operation in Brazil and came either from SGS Canada or Sigma Brazil.  These parameters are believed to be sufficient to include all block models in future open pit mine planning, due mostly to the relatively low mining costs in Brazil.

The Mineral Resource estimates for Grota do Cirilo are reported in Table 0-1 to Table 0-4 using a 0.5% Li2O cut-off.  The Mineral Resource estimates are constrained by the topography and are based on the conceptual economic parameters.  The estimate has an effective date of January 10, 2019.  The QP for the estimate is Mr. Marc-Antoine Laporte, P.Geo., an SGS employee.

Table 0-1 First Mine Deposit Mineral Resource Estimate

CUT-OFF GRADE

    

    

TONNAGE

    

AVERAGE GRADE

LI2O (%)

CATEGORY

(T)

LI2O (%)

0.5

 

Measured

 

10,193,000

 

1.59

0.5

 

Indicated

 

7,221,000

 

1.49

0.5

 

Measured + Indicated

 

17,414,000

 

1.55

0.5

 

Inferred

 

3,802,000

 

1.58

Notes to accompany Table 0-1 First Mine Deposit Mineral Resource Estimate:

1.

Mineral Resources have an effective date of January 10, 2019 and have been classified using the 2014 CIM Definition Standards.  The Qualified Person for the estimate is Mr. Marc-Antoine Laporte, P.Geo., an SGS employee.

2.

Mineral Resources are reported assuming open pit mining methods, and the following assumptions:  lithium concentrate (6% Li2O) price of US$1,000/t, mining costs of US$2/t for mineralization and waste, US$1.2/t for overburden, crushing and processing costs of US$12/t, general and administrative (G&A) costs of US$4/t, concentrate recovery of 85%, 2% royalty payment, pit slope angles of 55º, and an overall cut-off grade of 0.5% Li2O.

3.

Tonnages and grades have been rounded in accordance with reporting guidelines.  Totals may not sum due to rounding.

4.

Mineral Resources are reported inclusive of those Mineral Resources converted to Mineral Reserves.  Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

5.

Long-term lithium concentrate price of $1,000/t assumes processing cost of US$12/t and metallurgical recovery of 85%.

41

2021 ANNUAL INFORMATION FORM


Graphic

Table 0-2 Second Mine Deposit Mineral Resource Estimate

CUT-OFF GRADE

    

    

TONNAGE 

    

AVERAGE GRADE

LI2O (%)

CATEGORY

(T)

LI2O (%)

0.5

 

Measured

 

10,313,000

 

1.4

0.5

 

Indicated

 

10,172,000

 

1.46

0.5

 

Measured + Indicated

 

20,485,000

 

1.43

0.5

 

Inferred

 

1,909,000

 

1.44

Notes to accompany Table 0-2 Second Mine Deposit Mineral Resource Estimate

1.

Mineral Resources have an effective date of January 10, 2019 and have been classified using the 2014 CIM Definition Standards.  The Qualified Person for the estimate is Mr. Marc-Antoine Laporte, P.Geo., an SGS employee.

2.

Mineral Resources are reported assuming open pit mining methods, and the following assumptions:  lithium concentrate (6% Li2O) price of US$1,000/t, mining costs of US$2/t for mineralization and waste, US$1.2/t for overburden, crushing and processing costs of US$12/t, general and administrative (G&A) costs of US$4/t, concentrate recovery of 85%, 2% royalty payment, pit slope angles of 55º, and an overall cut-off grade of 0.5% Li2O.

3.

Tonnages and grades have been rounded in accordance with reporting guidelines.  Totals may not sum due to rounding.

4.

Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

5.

Long-term lithium concentrate price of $1,000/t assumes processing cost of US$12/t and metallurgical recovery of 85%.

Table 0-3 Murial Deposit Mineral Resource Estimate

CUT-OFF GRADE

    

    

TONNAGE

    

AVERAGE GRADE

LI2O (%)

CATEGORY

(T)

LI2O (%)

0.5

 

Measured

 

4,175,000

 

1.17

0.5

 

Indicated

 

1,389,000

 

1.04

0.5

 

Measured + Indicated

 

5,564,000

 

1.14

0.5

 

Inferred

 

669,000

 

1.06

Notes to accompany Table 0-3 Murial Deposit Mineral Resource Estimate

1.

Mineral Resources have an effective date of January 10, 2019 and have been classified using the 2014 CIM Definition Standards.  The Qualified Person for the estimate is Mr. Marc-Antoine Laporte, P.Geo., an SGS employee.

2.

Mineral Resources are reported assuming open pit mining methods, and the following assumptions:  lithium concentrate (6% Li2O) price of US$1,000/t, mining costs of US$2/t for mineralization and waste, US$1.2/t for overburden, crushing and processing costs of US$12/t, general and administrative (G&A) costs of US$4/t, concentrate recovery of 85%, 2% royalty payment, pit slope angles of 55º, and an overall cut-off grade of 0.5% Li2O.

3.

Tonnages and grades have been rounded in accordance with reporting guidelines.  Totals may not sum due to rounding.

4.

Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability

5.

Long-term lithium concentrate price of $1,000/t assumes processing cost of US$12/t and metallurgical recovery of 85%.

Table 0-4 Lavra do Meio Deposit Mineral Resource Estimate

CUT-OFF GRADE

    

    

TONNAGE

    

AVERAGE  GRADE

LI2O (%)

CATEGORY

(T)

LI2O  (%)

0.5

 

Measured

 

1,626,000

 

1.16

0.5

 

Indicated

 

649,000

 

0.93

0.5

 

Measured + Indicated

 

2,275,000

 

1.09

0.5

 

Inferred

 

261,000

 

0.87

Notes to accompany Table 0-4 Lavra do Meio Deposit Mineral Resource Estimate

42

2021 ANNUAL INFORMATION FORM


Graphic

1.

Mineral Resources have an effective date of January 10, 2019 and have been classified using the 2014 CIM Definition Standards.  The Qualified Person for the estimate is Mr. Marc-Antoine Laporte, P.Geo., an SGS employee.

2.

Mineral Resources are reported assuming open pit mining methods, and the following assumptions:  lithium concentrate (6% Li2O) price of US$1,000/t, mining costs of US$2/t for mineralization and waste, US$1.2/t for overburden, crushing and processing costs of US$12/t, general and administrative (G&A) costs of US$4/t, concentrate recovery of 85%, 2% royalty payment, pit slope angles of 55º, and an overall cut-off grade of 0.5% Li2O.

3.

Tonnages and grades have been rounded in accordance with reporting guidelines.  Totals may not sum due to rounding.

4.

Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

5.

Long-term lithium concentrate price of $1,000/t assumes processing cost of US$12/t and metallurgical recovery of 85%.

Factors that can affect Grota do Cirilo Mineral Resource estimates include but are not limited to:

·

Changes to the modelling method or approach

·

Changes to geotechnical assumptions, in particular, the pit slope angles

·

Metallurgical recovery assumption that are based on preliminary test results

·

Changes to any of the social, political, economic, permitting, and environmental assumptions considered when evaluating reasonable prospects for eventual economic extraction.

Mineral Resource estimates can also be affected by the market value of lithium and lithium compounds.

MINERAL RESERVE ESTIMATES

First Mine Mineral Reserve estimates have an effective date of 5 June 2019 and have been converted from Measured and Indicated Mineral Resources.  The key parameters upon which the 5 June 2019 Mineral Reserve estimates were defined are summarized in Table 0-5.

Table 0-5 Parameters Used in First Mine Pit Optimization

PARAMETER

    

VALUE

Lithium concentrate price

 

US$700/t concentrate

Royalties (CFEM)

 

2% of revenue

Exchange rate

 

3.7 BRL/ US$

Costs

Mining

 

US$2.15/t mined

Processing

 

US$10.51 /t ore

G&A

 

US$3,809,106/ year

Logistics

 

US$82/t concentrate wet

Plant recovery

 

60.4%

Concentrate grade

 

6%

Mining recovery

 

100%

Dilution

 

9.3%

Overall Pit slopes

 

33.6° – 53°

Note: CFEM is the Brazilian government royalty

The total Proven and Probable Mineral Reserves are as presented in Table 0-6.

Table 0-6 First Mine Mineral Reserves

43

2021 ANNUAL INFORMATION FORM


Graphic

RESERVE

    

TONNAGE (T)

    

LIO (%)

Proven

 

10,270,000

 

1.45

Probable

 

3,520,000

 

1.47

TOTAL

 

13,790,000

 

1.46

Note to accompany Mineral Reserves table:

1.

Mineral Reserves have an effective date of 5 June 2019.  The Qualified Person for the estimate is Porfirio Cabaleiro Rodriguez, FAIG, an employee of GE21.

2.

Mineral Reserves are confined within an optimized pit shell that uses the following parameters:  lithium concentrate price:  US$700/t concentrate; mining costs:  US$2.15/t mined; processing costs:  US$10.51/t processed; general and administrative costs: US$3.8 M/a; logistics costs:  US$82/t wet concentrate; process recovery of 60.4%; mining dilution of 9%; pit inter-ramp angles that range from 40.5 74.8º.

3.

Tonnages and grades have been rounded in accordance with reporting guidelines.  Totals may not sum due to rounding.

The existing high voltage transmission line at Pit 1 will need to be relocated in Year 2 so as not to interfere with the mining of the pits northern part.  The Company has been given the legal authority to relocate the line by 150 m.

The Company has not purchased the surface rights for Pit 2 but has applied to the ANM (Brazilian mining regulatory agency) for the granting of authority to mine the area.  Pit 2 will come into operation 1.5 years after plant start-up.

MINING METHODS

First Mine

The Company has undertaken a program of resource drilling for the First Mine deposit.  Most of these drill holes have been geotechnically logged for structural data.  The geotechnical data logged from these holes has been analyzed to provide estimates of slope stability, using industry standard empirical techniques.

The mine layout and operation are based on the following criteria:

Two independent open pits areas: Pit 1 in the north and Pit 2 in the south

Single access from both pits to the mine infrastructure pad and the processing plant

Low height ore benches to reduce mine dilution and maximize mine recovery

Pre-splitting of the ore zone to reduce mine dilution

Elevated inter-ramp angles for the waste to reduce strip ratio.

The basis for the scheduling includes:

Six months of pre-stripping to liberate the ore

Mining of Pit 1 first as this is closer to the processing plant and is also included in the current environmental license process

Disposal of the waste rock at the start of operation at pile 1 (close to processing plant) and pile 2

Commence disposal of waste rock at pile 3 after one year and three months from the start of the operation

Commence mining of Pit 2 from Year 3 onwards

Mine both pits in conjunction from Year 3 to Year 6 to reduce the drop-down rate and to facilitate the 1.5 Mtpa production rate

The planned open pit mine life is nine years and three months

The mining fleet is based on off-highway trucks for the waste movement and road trucks for the ore to be operated by a mining contractor.

Second Mine

GE21, based on the Mineral Resource, prepared the PEA for the Second Mine.

The PEA is preliminary in nature and includes inferred mineral resources that are too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized.

44

2021 ANNUAL INFORMATION FORM


Graphic

It is noted that the Company has not yet made a production decision in respect of the Second Mine. The Company expects that it will assess the results of a pre-feasibility study and a feasibility study before making a production decision in respect of the Second Mine. All statements regarding mine development or production in respect of the Second Mine in this AIF are expressly qualified by this statement.

The mine layout and operation are based on the following criteria:

·

A single open pit on the Second Mine pegmatite

·

Low height mineralized material benches to reduce mine dilution and maximize mine recovery

·

Pre-splitting of the mineralized material to reduce mine dilution

·

Elevated inter-ramp angles for the waste to reduce strip ratio

The basis for the scheduling includes:

·

Pre-stripping the pit to liberate mineralized material

·

Pit cut-backs in years 5 and 6 to expand and deepen pit

·

Mining at a rate of 1.68 Mtpa

·

The planned open pit mine life is 12 years and eight months

·

The mining fleet is based on off-highway trucks for the waste movement and road trucks for the mineralized material to be operated by a mining contractor

RECOVERY METHODS

The First Mine concentrator plant is designed to produce a minimum 6.0% Li2O spodumene concentrate from an ore grade of 1.46% Li2O (diluted) with an average iron content of 0.97%, using DMS.

If a positive production decision is made for the Second Mine, a second DMS concentrator plant would be constructed to process the Second Mine mineralized material. This plant would produce a minimum 6.0% Li2O spodumene concentrate from a mineralized material grade of 1.44% Li2O (diluted) with an average iron content of 0.97%.

Processing Plant Description

The First Mine plant throughput capacity is based on 1.5 Mtpa (dry) of ore fed to the crushing circuit. The in-house crushing circuit is sized for 3.0 Mtpa, which will accommodate the additional mineralized material from Second Mine, if developed. The First Mine wet plant (DMS) is sized for 1.5 Mtpa throughput capacity, while the possible Second Mine DMS is based on a 1.68 Mtpa throughput capacity.

The concentrator plants are designed based on a proven DMS circuit and include three-stage conventional crushing and screen circuit, up-flow classification for mica removal, two-stage coarse DMS circuit, two-stage fines DMS circuit, single-stage ultrafines circuit, as well as magnetic separation and optical sorting on the final product stream.

Design Criteria and Utilities Requirements

The data for the feasibility study engineering and design were sourced from metallurgical test-work conducted at SGS Lakefield.  Recovery data are based on results from variability samples #3 and #4.  The mass balance, process design criteria and process flow diagrams were developed based on these test work data.

The utilities consumption requirements are approximately 6.7 MW for the process plant and 1.5 MW for non-process infrastructure at the process plant.

45

2021 ANNUAL INFORMATION FORM


Graphic

The raw water consumption for process water is nominal at 23 m3/hr (make-up raw water requirement).

The process water will be recycled within the plant using a thickener, where all fines slurry streams will be directed and recovered.  This water will be pumped to the process water tank and recycled to the circuits.

Consumables will include reagents and operational consumables for the crushing circuit and the DMS plant.

PROJECT INFRASTRUCTURE

The First Mine project infrastructure will be constructed on earthworks pads for the mineral processing plant, the mine operation support units, the open pits of the mines and the areas of waste rock and tailings disposal.

If developed, the Second Mine will utilize the infrastructure developed for the First Mine.

Buildings, Roads, Fuel Storage, Power Supply and Water Supply

Access to the processing plant will be by municipal road linking BR367 within the communities of Poço Dantas and Taquaril Seco.  The current road will be suitable for truck traffic; however, construction of a new section of the road will be necessary to bypass the plant.

The plant and mine services areas will have administrative buildings such as offices, changeroom, cafeteria, concierge, clinic, fire emergency services and operation support facilities such as workshops and warehouses.

Fuel will be stored and dispensed from a fuel facility located at the mine services area.

Power will be supplied from the existing power grid line.  Two main sub-stations (CEMIG and plant) will be installed to supply power to the plant, the mine services area and associated infrastructure.

Raw water will be supplied from the Jequitinhonha River, treated as necessary and reticulated within the plant for process, potable and firewater needs.

Waste Rock and Tailings Disposal and Stockpiles

At the First Mine, waste rock and tailings will be stored in two piles in the initial years of operation.  Waste pile 1 will be located near the process area (both in the Olimpio area) and will be used for co-disposal of waste rock and tailings generated from the plant.

Waste pile 2 will be located to the south, in the Gilson area.

Both piles will have 25m wide access ramps with maximum gradients of 10%.

Waste piles 3 and 4 will be located adjacent to the north and south pits respectively. Table 0-7 provides the projected storage requirements.

Table 0-7 Waste Pile Storage

    

    

    

WASTE &

    

WASTE ROCK

TAILINGS

TAILINGS TOTAL

YEARS – 

M3

M3

MT

S